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MOSCOW (MRC) -- The demand impact from
widespread lockdowns causes an immediate demand headache. But longer-term
structural obstacles remain, said Hydrocarbonprocessing.
“The
prospects for European gasoline look particularly grim at the moment.” So says
Chris Judge, vice-president, crude and oil products at price reporting agency
Argus Media and an analyst of European refined products markets for well over 20
years.
Or, rather said. As, to put into context the scale of both the
short and longer-term challenges facing the European refining sector, Judge
uttered these words in late February, before the extent of the impact of the
Covid-19 pandemic on European and global products demand was clear.
These
short-term challenges are daunting enough in themselves. The grounding of the
majority of the world’s plane and strict lockdowns on people’s mobility bite
hard into transport fuel demand.
Requirements for jet fuel have fallen
dramatically. Consultancy Energy Aspects warns that refineries in Spain and the
Netherlands are at particular risk of being forced to cut jet fuel output. “The
financial pressures from [the pandemic] event will perhaps accelerate the
rationalisation of capacity in Europe,” says Robert Campbell, the firm’s head of
oil products research.
Not every refinery throughput is hit as hard as
jet and middle distillates. There will be a more muted impact for refiners that
produce a lot of marine fuel, according to Eugene Lindell, a senior consultant
at research firm JBC Energy.
"From the [marine fuel] refiners’ side, we
do not see any production issues as the low sulphur fuel oil crack is expected
to be higher than the gasoline crack meaning that refiners will have an
incentive to supply this fuel first,” says Lindell. “One complicating issue is
that the low outright crude price automatically creates a narrower price spread
between clean and dirty fuel. This is bad news for ship owners that invested in
scrubbers, as it lengthens the payback period."
We also remind that the
COVID-19 outbreak has led Shell Chemical to temporarily suspend construction on
the massive plastics and petrochemicals site it's building in Monaca, Pa,
USA.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and
polypropylene (PP).
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 383,760 tonnes in the first two month
of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low
density polyethylene (LLDPE) shipments increased due to the increased capacity
utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian
market were 192,760 tonnes in January-February 2020, down by 6% year on year.
Homopolymer PP accounted for the main decrease in imports. |
