In recent years, with the continuous increase of domestic environmental protection efforts, the transformation of recycled plastics, a policy-oriented industry, has become more and more obvious. Especially after December 31, 2017, waste and scrap materials from living sources were banned outside the country, the import pattern of the recycling industry has changed dramatically, and the demand gap of 6-8 million tons per year has been opened. On the domestic side, the start-up of production enterprises has become the most serious problem at present, and the start-up face directly affects the domestic supply, therefore, whether it is import or country. The change of production and its supply has become a concern of the industry.

Reporters learned that in the past five years, the import volume of recycled PE in China has shown a downward trend. Recycled polyethylene imports began to decline in 2015. Since the hedge action in February 2013, environmental protection in the recycling market has become more and more stringent. In addition, the import of recycled polyethylene declined rapidly from 2015 to 2016, which coincided with Waterloo in the plastic industry. According to statistics from Jin Lianchuang, imports of recycled PE fell to 35683,000 tons in 2015, a decline of 18.95%. In the following years, imports declined at a rate of 20% to 30%. Until this year, imports fell to freezing point.

Since December 31, 2017, the Implementing Plan for the Reform of the Management System of Prohibiting the Entry of Foreign Waste and Promoting the Import of Solid Waste has been formally implemented. China has prohibited the import of 24 Categories of solid waste in four categories. “The implementation of the”ban on waste”has caused tremendous changes in the recycled plastics market. From January to September 2018, the import volume of recycled PE was 103,000 tons, a decrease of 166,160,000 tons compared with the same period last year, a decrease of 99.39%. Xu Xiujun, an analyst at Jinlianchuang Plastics, said.

In April 2018, the Ministry of Ecological Environment and the General Administration of Customs jointly issued that 16 kinds of solid wastes, such as waste plastics from industrial sources, were transferred from the Catalogue of Solid Wastes Restricting Imports as Raw Materials to the Catalogue of Solid Wastes Prohibiting Imports, which has been implemented since 31 December 2018. That is to say, imports of recycled plastics will cease to exist after 2019. “The domestic production trend of recycled polyethylene is roughly the same as that of imported polyethylene, but the difference is that the domestic production growth trend is different.” Xu Xiujun said that with the continuous strengthening of domestic environmental protection in recent years, especially in 2017-2018, the Ministry of Ecology and Environment strictly inspected “scattered and dirty” enterprises, the Blue Sky Defense War in 2018-2019, the Central Environmental Protection Inspection and so on. Under the pressure of the policy, the overall start-up rate was affected by the strict inspection of waste water and exhaust gas pollution, and domestic production declined. According to statistics from Jin Lianchuang, the domestic recycled polyethylene recovery from January to October 2018 was 2.4277 million tons, 17.84% less than that in 2017. “The downstream demand side is still a major factor affecting supply. For the whole year of this year, the demand side of terminal has not improved significantly, and the phenomenon of warmth is obvious. In addition, upstream products factories are more or less affected by environmental protection, and the overall pace of trade is slow. Xu Xiujun said that in recent years, the price difference between old and new materials has been less than 1,000 yuan. With the narrowing of the price gap, some customers tend to increase the trend of new materials, and the pressure of shipment in the recycling market increases.

Xu Xiujun believed that due to the construction of regeneration market parks and more and more EIA manufacturers putting into production, as well as the increasing awareness of national recycling, the stock of domestic wool materials will gradually rise. In the near future, the domestic supply of regenerated polyethylene industry will continue to rise, and the import gap will gradually be filled.

On January 14, the inventory of zinc ingots in London LME market was 126 225 tons, with a decrease of 575 tons, representing a decrease of 0.45%.

On January 14, the LME zinc ingot stock was 126225 tons, of which 109025 tons were registered warehouse receipts and 17200 tons were cancelled warehouse receipts, accounting for 13.63%.

Price data:

According to the data from the business associations’list, the domestic sulphur market has been running steadily this week, with the average export price of granular sulphur at the weekend being about 1433.33 yuan/ton, up 27.47% from the same period last year.

II. Market Analysis

Products: On Tuesday, the price of sulphur market increased. The quotation of domestic refineries basically increased by 20-60 yuan/ton this week. At the same time, the price of port transactions also rose sharply to support the domestic market. The price of international market is inversely linked to that of domestic market, and the overall trend of Chinese market is rising.

Industry chain: Phosphate fertilizer market is running slowly, monoammonium is short of real orders, and domestic delivery of diammonium remains sluggish. On the downstream side, demand is sluggish, replenishments are less, traders are not willing to make profits, and holders’quotations are firm.

3. Future Market Forecast

Sulphur analysts from the Business Society Chemical Branch believe that in the near future, the mainstream port stock is not high, the market is supported slightly, the TRADERS’price-fixing mentality is obvious, the willingness to make profits and shipments is not strong, and the sulfur market is mainly stable in the near future.

Price Trend

According to the data from the business associations’list, the domestic TDI market shocked down this week, with the average price of enterprises at the beginning of the week being 14233.33 yuan/ton, and the average price of enterprises at the weekend being 14066.67 yuan/ton. The price fell within the week by 1.17%.

II. Market Analysis

Product: The domestic TDI market fell slightly this week. Shandong Dongda-Novi Polyurethane Company reported 14200 yuan/ton; Zhangjiagang Bonded Zone Pan-Asian International Trade Co., Ltd. reported 14500 yuan/ton; Nanjing Carbon Green Chemicals Co., Ltd. reported 13500 yuan/ton.

Industry chain: Shanghai Cosco TDI plant resumed operation, a wide price cut to 14,000 yuan/ton, coupled with Wanhua Chemical 300,000 tons/year TDI plant completed and put into production, downstream “buy up kill down” mentality continued to play a role, focusing on Wanhua new product dynamics and TDI price decline, on-site inquiry buying gas is low, real single transaction is blocked, business mentality panic, the focus of negotiations continues to shift.

3. Future Market Forecast

According to the data analyst of business associations, the spot resources in the market are relatively abundant, the market is difficult to say better under the negative leadership, and the short-term market will continue to bottom out.

A. Reserves and production

Most of Russia’s crude oil resources are located between the Ural Mountains and the Central Siberian Highlands, as well as in areas extending southwest to the Caspian Sea. According to the data of BP World Energy Statistics Yearbook in 2017, Russian crude oil reserves are about 110 billion barrels, ranking sixth in the world. With the continuous development and production of oil fields in the early exploration period, Russian crude oil reserves showed a downward trend as a whole. In 2007 and 2016, as new crude oil resources were discovered, Russian crude oil reserves increased significantly. In 2016, the reserves increased by 6.96% year on year. According to the same period of production, the ratio of Russian crude oil reserves to production was 27.4.

Russia is one of the largest countries in the world in crude oil production. Since 2009, it has been stable at more than 10 million barrels per day, showing a steady growth trend.

According to the regional division, the most abundant area of Russian crude oil production is located in Siberia. According to the latest data, Russian crude oil production reached 10.87 million barrels per day in 2016, of which 6.29 million barrels were produced in Siberia, accounting for nearly 58%. The next is the Ural-Volga region, which produces 2.5 million barrels per day, accounting for about 23%. Russia’s oil production reached a record 11.16 million barrels per day in 2018.

Siberia is a relatively late development area, but with the increase of development activities, the crude oil production in this area has increased rapidly, surpassing the Ural-Volga region with the largest production before. Khanty-Mansiysk Autonomous Prefecture, located in the south of Siberia, is the largest production area in the region and even in the whole country, accounting for about 77% of the total output of the region and about 45% of the total output of the country. Samotler oilfield is the largest oil field in the Autonomous Prefecture and also the largest oil field in Russia. The field began production in 1969, but production began to decline gradually after reaching a high of 635,000 barrels per day in 2006. With the improvement of production technology, the attenuation rate of the oilfield remains at about 3%, far below the natural attenuation rate of 15%.

Yamal-Nenets Autonomous Prefecture is located in the Arctic Ocean coast of Siberia, with U-shaped distribution. In the early period of the autonomous region, natural gas production was dominant, and the history of crude oil development was relatively short, accounting for about 15% of the total output of Siberia. In the future, the problem it faces is the bottleneck of crude oil outward transportation, so the infrastructure construction such as pipeline needs to be improved urgently.

Until the late 1970s, Ural-Volga was still Russia’s largest oil producer. But with the rise of Siberian crude oil production, the region now ranks second in Russia. The famous Urals Blend oil is named after this place. Romashkinskoye, discovered in 1948, is a large oil field in Ural-Volga, with an average daily output of about 300,000 barrels. The Ural-Volga region represented by this oilfield is characterized by the general aging of the oilfield. But recently, due to the innovation of drilling and completion technology, the production efficiency of the oilfield has been improved to a certain extent, so the crude oil production has not decreased significantly.

With the aging of oil fields in the western Ural-Volga region and the West Siberia region, and the increasing degree of development, the center of crude oil exploration and development gradually moves eastward, and East Siberia may become the main source of Russian crude oil increment in the future. Vankorskoye Oilfield, located in the northwest of the region and along the Arctic Ocean, has a significant proportion of Russian crude oil increment in recent years, with an average daily output of about 440,000 barrels. It is the largest oil field discovered in the country in the past 25 years. In addition, the completion of the East Siberian-Pacific Coastal Pipeline (ESPO) has also expanded the oil and gas development space here.

Further eastward, Sakhalin Island is located off the eastern coast of Russia, with an average daily output of about 340,000 barrels, and unlike other Russian production areas, foreign oil and gas companies are more involved here. Most of Sakhalin’s oil fields are invested through the Sharing of Interests Agreement (PSA), which includes two major projects, Sakhalin-1 and Sakhalin-2. Among them, Sakhalin-1 mainly includes Chayvo, Odoptu, Arkutun-Dagi and other three oil and gas fields, which are operated by ExxonMobil, which accounts for 30% of the equity. Other stakeholders include Rosneft of Russia, ONGC of Indian state-owned oil company and Japanese consortium. Sahhalin-2 mainly includes Piltun-Astokhskoye Oilfield, Lunskoye Gas Field and two natural gas and oil pipelines responsible for North-to-South transmission within the island; the Gazprom equity of the project accounts for 50% plus one share, Shell equity accounts for 27.5%, Mitsubishi Group accounts for 12.5%, Mitsubishi Group accounts for 10%.

The North Caucasus is located in the southwest of Russia, and its topography is relatively complex. The region is surrounded by Kazakhstan and the Caspian Sea in the east, Ukraine, Crimea and the Black Sea in the west, Georgia, Azerbaijani and Turkey in the south. In addition to offshore oil fields, offshore oil fields in the Caspian Sea are also rich in oil resources. Russian oil company Lukoil is very active in offshore oilfield development in the Caspian Sea. Yurii Korchagin oilfield was put into production in 2010 with an average daily output of about 30,000 barrels, and Filanovsky oilfield was put into production in 2016 with an average daily output of about 120,000 barrels. The unique geographical location of the North Caucasus has led to the export-oriented production of crude oil, so tax policy has a greater impact on the production of the region.

B. export

Russia’s crude oil exports have undergone two stages of evolution since 2000: from 2000 to 2007, the export volume increased at a high speed, with an annual growth rate of up to 15%. After the financial crisis in 2008, the export volume declined sharply, and it did not turn to positive growth until after 2010. In recent years, with the improvement of infrastructure, Russian crude oil exports have maintained steady growth. In 2017, Russia’s crude oil exports to China gradually increased, even surpassing Saudi Arabia, becoming China’s largest crude oil supplier.

By region, Europe and China are the biggest buyers of Russian crude oil. According to BP data, Russia exported 8.634 million barrels of crude oil per day in 2016, of which nearly 5.6 million barrels per day were exported to Europe, accounting for nearly 65%, of which Germany, the Netherlands, Poland and other countries accounted for a significant proportion. China is the second largest destination for Russian crude oil exports. In 2016, Russia exported about 1.65 million barrels of crude oil per capita to China, accounting for nearly 20% of its total exports. It is noteworthy that Russia’s exports to China are higher than the total exports of all regions and countries except Europe. With the ESPO pipeline connecting Daqing put into use, Russia’s crude oil exports to China are expected to continue to increase in the future.

Russia produces three different types of crude oil, namely Urals Blend, Sokol and ESPO.

Ural crude oil is Russia’s main export oil, most of which is supplied to Europe. It is composed of heavy high-sulfur crude oil from Ural-Volga region and light low-sulfur crude oil from Siberia. Multiple blending means that the specification parameters of Ural crude oil vary greatly, but generally it belongs to medium sulfur crude oil with API of about 31 and sulfur content of about 1.4%. Therefore, the market price of Ural crude oil will be lower than that of Brent in the North Sea. Sweet light oil from Siberia has a higher value because of its relatively good quality. However, Siberia is located in the inland central region of Russia, so there are transport bottlenecks, leading to the increase of the threshold for direct export of the oil species, some of which will be exported in the form of Ural crude oil after blending.

ESPO crude oil is mainly produced in Siberia. It is blended with crude oil produced in the oilfields in this area. It belongs to light and low sulfur crude oil, so its quality is higher than Ural crude oil. ESPO crude oil is mainly exported to China through the pipeline of the same name. In addition, it is also exported to other Asia-Pacific countries by sea through Kozmino Port on the eastern Pacific coast of Russia.

Sokol crude oil is the highest quality crude oil among the three main types of oil. It is produced in Sakhalin Island. Its API is about 36 and its sulfur content is about 0.3%. It belongs to light and low-sulfur crude oil. Sakhalin Blend is also produced on the island. Its quality is higher than that of Sokol. Its API is about 45.5 and its sulfur content is about 0.16%. It is mainly exported by sea through the port of Prigorodnoye in the southern part of Sakhalin Island.

In addition to the above three main oils, Arco crude oil and Novy crude oil from the Arctic Ocean coast have relatively small output and large quality differences. Arco crude oil belongs to medium-quality high-sulfur crude oil with API of about 24 and sulfur content of about 2.3%. Novy crude oil belongs to medium and low sulphur crude oil with API of about 32 and sulphur content of about 0.1%.

C. Refining Industry

Russia’s crude oil consumption has undergone two stages of evolution in the past 30 years. From 1985 to 1990, although consumption demand remained low, crude oil consumption reached 5 million barrels per day. After 1991, crude oil consumption showed a cliff-like decline, and began a period of gentle rise in 1998. By 2016, the average daily crude oil consumption in Russia was about 3.2 million barrels.

Compared with Russia’s huge crude oil production scale, its domestic demand volume is very small. Russia’s crude oil consumption accounts for less than one-third of its output, and its oversupply means that Russia is an export-oriented country in terms of crude oil resources. According to BP data, Russia’s excess crude oil supply reached 8.24 million barrels per day in 2016, and inadequate demand led to the need for additional supplies to be externally digested through exports.

On the import side, Russia generally does not need to import crude oil from abroad, because domestic supply is sufficient and surplus. Russia imported 800,000 tons of crude oil in 2016, almost all of which came from CIS member states, while the imports from other countries were negligible. The import volume of this part is due to the lack of infrastructure and transportation bottlenecks.

At present, there are 37 refineries in Russia, with an average daily refining capacity of about 5.1 million barrels. Most of the refining capacity is concentrated in the western part of Russia, starting from the Yamal Peninsula, bounded south to Kazakhstan and west to the Russian refining capacity concentration belt. Among them, the offshore area north of Caspian Sea has the most concentrated refining capacity. In addition, there are some refining facilities in the south-central region bordering Mongolia and in the southeastern region bordering China.

Rosneft is Russia’s largest oil and gas refinery with 10 refineries in the country, accounting for about 35% of the country’s oil refining capacity. According to Rosneft’s annual report, the total available refining capacity in 2016 is 118 million tons (8.6 billion barrels), the practical capacity is 101 million tons (74 million barrels), the average daily refining output is 2.03 million barrels, and the utilization rate is about 86%. Lukoil ranks second in refining capacity, with refinery output of 62.3 million tons, or 15 percent, in 2016, according to its annual report.

Russia’s refining capacity has basically met domestic consumption demand, so the import volume of refined oil is relatively small. According to BP data, Russia imported 35,000 barrels of petroleum products and exported 3.15 million barrels per day in 2016, compared with nearly one percent of its exports.

Generally speaking, Russia’s crude oil industry is characterized by more resources, less consumption, double steps and export-oriented. Therefore, without a major turning point in the domestic economy and relatively stable domestic demand, Russia’s crude oil supply has become a key factor affecting the fundamentals of the oil market.

D. Infrastructure Construction

The crude oil pipeline in Russia presents a two-way pattern in design characteristics, aiming at the two largest demand markets in Europe and the Asia-Pacific region respectively.

According to transport capacity design, Druzhba is Russia’s largest crude oil pipeline and one of the largest crude oil pipelines in the world. It can transport up to 2 million barrels of crude oil per day, and is the main artery of the main crude oil producing areas to Europe.

Druzhba pipeline is located in Almetyevsk, Ural-Volga, the second largest crude oil producing area. Through the connection of subdivided pipelines, the crude oil produced in Siberia can be transported to the west. Because of the huge production in the above two areas, the transportation pressure of Druzhba pipeline is higher.

BPS-1 and BPS-2 are two branches of Druzhba. They are transported to Primorsk and Ust-Luga ports respectively. They are important throats for maritime exports.

CPC is a crude oil pipeline connecting the Caspian Sea and the Black Sea, starting from the Caspian Sea coast of Kazakhstan and ending at Novoorossiysk in Russia and along the Black Sea coast. The designed maximum capacity is 1.3 million barrels per day.

B-K is a relatively small pipeline in the vicinity of the Caspian Sea, starting in Baku, the Caspian coastal city of Azerbaijani, and transporting northwest to Novoorossiysk, Russia’s Black Sea coast, with a maximum capacity of 100,000 barrels per day. Baku is an important crude oil hub in the Caspian Sea region. There are three crude oil pipelines originating in the city, one of which is the B-T-C pipeline with a maximum capacity of 1.2 million barrels per day, and the end point is at C eyhan Port, Turkey.

ESPO is an important pipeline located in the eastern part of Russia. The main pipeline connects Taishet and Kovorodino, and then forms two branches ESPO-2 and ESPO China Section, connecting Kozmino Port and Daqing of Heilongjiang Province, with capacity of 600,000 barrels per day and 400,000 barrels per day, respectively. Kozmino is an important port in the eastern part of Russia and along the Pacific Ocean. It is Russia’s fourth largest crude oil export port and an important channel for transporting crude oil to the Asia-Pacific region.

Based on the above data, it is estimated that the external transportation capacity of Russia’s main crude oil pipelines is about 7.1 million barrels per day, plus the capacity of some subdivided pipelines and maritime transportation, which can basically meet the demand of Russia’s export. In addition, ESPO-1 and ESPO-2 have corresponding expansion projects. By 2020, an additional 800,000 barrels/day capacity will be released to cope with the growing demand in the Asia-Pacific market.

Russia’s four major crude oil export ports cover 84% of its maritime exports. Primorsk Port and Ust-Luga Port are located in the northwest corner of Russia, near St. Petersburg, and are the two largest crude oil export ports in the Finnish Gulf Port Group. The Port of Priorsk on the north coast of the Gulf of Finland and the Port of Ust-Luga on the South Coast connect BPS-1 and BPS-2 pipelines, respectively.

Novorossiysk Port is Russia’s largest crude oil export port, located in the southwestern corner of Russia along the Black Sea. The relatively convenient geographical location has led to the port being mainly responsible for the export of crude oil from the surrounding areas of the Caspian Sea and from Central Asia.

Kozmino Port is located in the Far East, along the Pacific coast, and is the end point of ESPO-2 pipeline. The port began operation in 2009 with an initial export volume of about 300,000 barrels per day. Export volume increased by nearly 100% to 600,000 barrels per day in 2016. The port is an offshore hub for exporting crude oil to Korea and Japan.

In addition, as the eastern offshore Sakhalin Island is an important crude oil producing area in Russia, the port of Prigorodnoye, located at the southernmost end of the island, exports about 110,000 barrels of crude oil per day.

E. summary

Russia has huge reserves of crude oil resources. According to the current production schedule of the country, the proven resources can also maintain supply for nearly 30 years. At the same time, the structure of large supply and small demand for crude oil and refined oil has led to a double-step export-oriented crude oil industry in Russia. Without major changes in domestic demand, changes in the supply side have far-reaching impact on the global crude oil market pattern. Russia produces mainly medium crude oil, followed by light crude oil. Europe and China are Russia’s two largest export markets.

With the increasing friction between the United States and Russia, the U.S. Treasury Department has introduced new measures to sanction Russia’s crude oil industry, which has a certain impact on Russia’s industry and exports. Therefore, we need to continue to pay attention to the development of bilateral relations in the future.