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MOSCOW (MRC)
-- Naphtha output is forecast to stay tight into 2021 as destruction of fuel
demand caused by COVID-19 curbs refinery throughput and caps supply of the
dominant feedstock for ethylene production, according to Premasish Das,
executive director at IHS Markit, said Chemweek.
About
75% of naphtha, the feedstock for more than 40% of ethylene produced worldwide,
comes from refineries. But “refineries do not run based on how much naphtha they
want to produce. They run based on how much other key refined products they need
to produce,” says Das, speaking today at IHS Markit’s Asia NGLs and Naphtha
Conference Online.
The pandemic slashed worldwide demand for refined
products including gasoline, jet fuel, and fuel oil by nearly 18 million b/d,
prompting refiners to cut throughput by 15-16% in April alone. Some have
continued to idle plants or extend scheduled maintenance works, Das says.
Gasoline is the most impacted refined product in volume terms and with direct
blending accounting for about 30% of global light naphtha demand, the lower
blending demand outlook for the second and third quarters of this year has a
direct impact on naphtha, he says.
Steam cracking demand for light
naphtha, however, is expected to hold up with demand for petrochemicals proving
more resilient than transportation fuels. Further support for naphtha is coming
from unfavorable liquefied petroleum gas (LPG) cracking economics because of
tight gas supply, he notes. “The pull for naphtha will continue to be strong
from the petrochemical industry," Das says.
Based on IHS Markit
modelling, the shortfall in light naphtha supply will continue to grow in the
second half of 2020 and peak in the fourth quarter owing to reduced refinery
runs and lower production of natural gasoline, he says. While the shortfall is
forecast to contract as refiners ramp up runs to meet post-pandemic demand
recovery, the deficit in 2021 is still expected to be higher than in 2019, he
adds.
One way for refiners to help alleviate the tightness in light
naphtha supply is to back blend excess heavy naphtha, used for aromatics
production and gasoline blending, into light naphtha, according to Das.
Additional heavy naphtha can come from jet fuel optimization, the demand for
which will take the longest to recover. “Refiners would try to minimize jet
production by putting the front, or lighter end, of jet fuel into the heavy
naphtha stream,” Das says, adding that each refinery runs a different
optimization mode.
We remind that, in
September 2019, six world's major petrochemical companies in Flanders, Belgium,
North Rhine-Westphalia, Germany, and the Netherlands (Trilateral Region)
announced the creation of a consortium to jointly investigate how naphtha or gas
steam crackers could be operated using renewable electricity instead of fossil
fuels. The Cracker of the Future consortium, which includes BASF, Borealis, BP,
LyondellBasell, SABIC and Total, aims to produce base chemicals while also
significantly reducing carbon emissions. The companies agreed to invest in
R&D and knowledge sharing as they assess the possibility of transitioning
their base chemical production to renewable electricity.
Ethylene and
propylene are feedstocks for producing polyethylene (PE) and polypropylene
(PP).
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 721,290 tonnes in the first four
month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear
low density polyethylene (LLDPE) shipments grew partially because of the
increased capacity utilisation at ZapSibNeftekhim. At the same time, PP
shipments to the Russian market totalled 347,440 tonnes in January-April 2020
(calculated by the formula production minus export plus import). Supply
exclusively of PP random copolymer increased. |
