MOSCOW (MRC) -- Permanent refining capacity closures expected for 2020-2021 have risen to about 1.7 million bpd as the COVID-19 pandemic hammers demand for oil products, the International Energy Agency said, said Hydrocarbonprocessing.
About a dozen refinery closures have been announced in the past few months, the IEA said, with the bulk of capacity closures - over 1 million bpd - happening in the United States. “There were capacity shutdowns planned for 2020-2021 prior to COVID-19, but the bulk of the new announcements reflect pessimism about refining economics in a world suffering from temporary demand collapse and structural refining overcapacity,” the IEA said in its monthly report.
In 2019, global crude refining capacity stood at 102 million bpd, catering for 84 million bpd of refined oil products demand. That shrank to 76 million bpd in 2020 and is expected to be 80 million bpd in 2021, the IEA said. This week, Royal Dutch Shell said it will halve crude processing capacity and cut jobs at its 500,000 bpd Pulau Bukom oil refinery in Singapore.
In Europe, Petroineos plans to mothball nearly half of its 200,000 bpd refinery at Grangemouth in Scotland, and Gunvor will shutter its 110,000 bpd Antwerp oil refinery in Belgium. The outlook for refining remains mixed, with traditionally low-value naphtha and fuel oil possible bright spots in the new year, Vitol chief executive Russell Hardy told the Reuters Commodity Trading Summit this week.
He said the 1.6-1.7 million bpd of capacity closures already announced to take place by the end of 2021 to early 2022 could grow by a further 1 million bpd. Plateauing fuel demand, tightening environmental rules and overseas competition have prompted several European and U.S. refiners to opt for converting plants to produce biofuels.
As MRC informed earlier, Chemical railcar traffic in North America continues to make up the year-to-date deficit with 2019 while holding firm versus 2018. Volume for the year through 7 November was down 3.8% from 2019 and down 5.5% from 2018, compared to declines of 4.0% and 5.5%, respectively, for the year through 31 October. On a four-week basis, volume was up 0.4% from 2019 and down 4.4% from 2018 (chart), weakening slightly from the previous week, when the respective figures were up 0.8% and down 3.2%.
As MRC informed earlier, Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4% year on year.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,594,510 tonnes in the first nine months of 2020, up by 1% year on year. Only high denstiy polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market reached 880,130 tonnes in the nine months of 2020 (calculated using the formula: production minus exports plus imports, excluding producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
MRC