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European diesel refining margins slide as coronavirus spreads

February 28/2020

MOSCOW (MRC) -- Benchmark northwest European diesel refining margins LGOc1-LCOc1 fell by 22% to usd7.80 a barrel, their lowest since late September 2016, on the growing spread of the coronavirus in Europe, reported Reuters.

People are trading down the virus risk, one European trader said, in reference on the impact the virus will have on demand in Europe.

As MRC informed before, economic disruption surrounding the Wuhan coronavirus outbreak will significantly complicate petrochemical markets, not only cutting into demand globally, but also tightening access in China to feedstock and slowing capital projects, in H1 February 2020, said Dewey Johnson, vice president/base chemicals at IHS Markit. He estimates that each 1% decline in China"s GDP growth this year will translate into about 2.5 million metric tons/year (MMt/y) of lost base chemicals demand.

The coronavirus could also affect the pace of capital investment in China. "There"s significant amount of capacity being added today in China," Johnson notes. "Labor may be a key bottleneck in this period, and the question is, how does that affect the (engineering, procurement, and construction) schedules and plant start-ups?"

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC"s ScanPlast report, Russia"s estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).
Author:Margaret Volkova
Tags:Europe, PP, PE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, China, Russia.
Category:General News
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