MOSCOW (MRC) -- Asian refining margins for jet fuel rose on Monday, buoyed by an uptick in passenger traffic on some domestic flight routes and firmer air cargo demand ahead of the peak holiday season, reported Reuters.
Refining profit margins, also known as cracks, for jet fuel rose 36 cents to USD4.83 per barrel over Dubai crude during Asian trading hours, hovering close to a near nine-month peak touched last week.
Cracks for the aviation fuel in Singapore, which also determines the profitability of closely-related kerosene, have more than doubled in the last four weeks, Refinitiv Eikon data showed.
The jet fuel market, however, is expected to take years to go back to pre-pandemic levels, market watchers said. "For jet fuel, hit hardest by the pandemic... ultimately, a true rebound would require the resumption of international flights and cross-border tourism, which may be among the lasts to be returned, as COVID-19 headwinds ease," said Peter Lee, senior analyst at Fitch Solutions.
Cash differentials for jet fuel were at a discount of 27 cents a barrel to Singapore quotes, compared with a discount of 26 cents per barrel on Friday.
From Air Canada to China's CDB Aviation, airlines and leasing firms are rushing to permanently convert older passenger jets into freighters, betting on a boom in e-commerce as the value of used planes tumbles amid the pandemic.
Aviation analytics firm Cirium expects the number of P2F conversions globally will rise by 36% to 90 planes in 2021, and to 109 planes in 2022.
As MRC informed before, slumping fuel consumption during the pandemic is accelerating the long-term shift of refining capacity from North America and Europe to Asia, and from older, smaller refineries to modern, higher-capacity mega-refineries. The result is a wave of closures, often centering on refineries that only narrowly survived the previous closure wave in the years after the recession in 2008/09.
We remind that PetroChina has nearly doubled the amount of Russian crude being processed at its refinery in Dalian, the company's biggest, since January 2018, as a new supply agreement had come into effect. The Dalian Petrochemical Corp, located in the northeast port city of Dalian, was expected to process 13 million tonnes, or 260,000 bpd of Russian pipeline crude in 2018, up by about 85 to 90 percent from the previous year's level. Dalian has the capacity to process about 410,000 bpd of crude. The increase follows an agreement worked out between the Russian and Chinese governments under which Russia's top oil producer Rosneft was to supply 30 million tonnes of ESPO Blend crude to PetroChina in 2018, or about 600,000 bpd. That would have represented an increase of 50 percent over 2017 volumes.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
MRC