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PBF sees slow refining rebound as U.S. gasoline demand creeps higher

May 19/2020

MOSCOW (MRC) -- PBF Energy, the fourth-largest U.S. oil refiner by capacity, is holding processing near 70% of throughput even as more states relax stay-at-home orders, boosting demand for motor fuel, executives said, as per Hydrocarbonprocessing.

The gasoline crack spread RBc1-CLc1, which drifted negative in March as the coronavirus pandemic sharply cut air and road travel, has recovered to USD11.42 per barrel this week. However, fuel demand is off 23% in the United States over the last four weeks.

We are just not going to do what everybody expects refiners to do, see an improvement in gasoline cracks and say, The Holy Grail, there it is, lets ramp up, lets run, Chief Executive Thomas Nimbley said on an earnings call on Friday. This thing is not over." PBFs shares were up nearly 4% at USD9.62 on Friday. They are off nearly 70% year to date.

At the start of the year, PBF planned to run about 950,000 barrels of oil per day (bpd). But it now expects to run in the 650,000 to 750,000 bpd range, executives said on the call. Demand for gasoline has inched up and gasoline production has climbed for a third straight week to 7.5 million bpd, according to the latest data from the Energy Information Administration.Were not planning to get back to where things were prior to the pandemic, but I do believe at this point, we are starting to see green shoots related to a recovery, Nimbley told investors.

PBF Energy joined rivals such as Marathon Petroleum in shifting production to gasoline after initially maximizing diesel output during the early surge of coronavirus cases. With COVID-19 cases rising in South America, exports are being reduced, Nimbley said.

PBF reported a quarterly loss in the first quarter on a USD1.28 billion inventory writedown amid the sharp decline in fuel demand. The company posted an adjusted loss of USD1.19 per share, wider than analysts average estimate of a USD1.04 per share loss, according to IBES data from Refinitiv.

The loss reflected refinery operating expenses that were higher than analysts expected and weaker margins from a turnaround at its Toledo, Ohio, plant, financial services firm Tudor Pickering, Holt & Co wrote in a note on Friday. PBF said it cut its 2020 planned capital expenditures further by a total of more than USD350 million, from its previous estimates of USD240 million.

As MRC wrote before, US refiner PBF Energy has completed its acquisition of Shells 157,000 bbl/day Martinez refinery near San Francisco, California. The USD1bn deal, agreed in June 2019, was completed effective 1 February 2020.

Besides, in late March 2020, PBF Energy Inc said it was operating its refineries at minimum rates, with throughput about 30% lower than the refiners expectations, as coronavirus-driven travel curbs hit fuel demand.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
Author:Anna Larionova
Tags:petroleum products, crude oil.
Category:General News
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