MOSCOW (MRC) -- Diesel profit margins are bucking the downward spiral engulfing jet fuel and gasoline, lifted by continuing industrial activity and stockpiling even as national lockdowns hammer demand for other fuels, said Hydrocarbonprocessing.
With 3 billion people - nearly 40% of the world’s population - under lockdown and entire airline fleets being grounded, demand for transport and aviation fuels is plummeting. But in addition to being a transport fuel, diesel, and other middle distillates like gasoil, have industrial and domestic uses, and demand there has not been hit as hard.
However, diesel refining margins in Europe hit a five-month high on Monday at nearly USD17.50 a barrel while gasoline in the region is being produced at a loss and jet fuel differentials are trading at record lows, deep into negative territory. Refining margins for the benchmark 10ppm gasoil grade in Singapore have climbed about 45% in the past two weeks.
Asian jet fuel margins, meanwhile, are lingering at their lowest March levels for 12 years, Refinitiv Eikon data showed. “Gasoil has been the one bright spot for refiners as it remains supported by industrial demand and consumer stockpiling as prices fall,” shipbroker Gibson said in a note.
But it warned that margins will come under pressure as stockpiling demand wanes and warmer weather reduces demand for domestic heating. Gasoil demand up the Rhine river was high because of the contango price situation, while inland importers in Germany and Switzerland were building stocks to benefit from low prices, said Insights Global’s Lars van Wageningen.
"Asian diesel cracks have held up well despite severe weakness in jet and gasoline cracks in recent weeks,” consultancy Energy Aspects said. “But as Middle Eastern refineries are only now returning from turnarounds, we expect a sharp correction in Asian distillate markets soon to bring them into line with the fundamentals of other clean products,” it added.
As MRC informed earlier, brent oil futures may be trading at USD27 per barrel but oil producers are selling their crude in the physical market at lower prices not seen since the aftermath of the Asian financial crisis of the late 1990s. Most are offloading their oil for below USD20 a barrel as the coronavirus pandemic savages demand and global supply rises amid a battle between Saudi Arabia and Russia for market share, according to traders, state oil firms, major refiners and prices quoted in physical markets.
As MRC informed earlier, US-based Phillips 66 is delaying three sizeable scheduled shutdowns at its refineries this year, the company said last week, because of concerns that coronavirus could spread among the refineries' workers if the maintenance goes ahead.
We also reminad that Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.
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).
MRC