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MOSCOW (MRC) -- Asia's cash
differentials for 10 ppm gasoil firmed to their highest level in four-and-a-half
months on Monday, while refining margins for the industrial fuel slipped despite
weaker prices of raw material crude, reported Reuters.
Cash discounts for gasoil
with 10 ppm sulphur content narrowed by a cent to 4 cents a barrel to Singapore
quotes, the smallest discount since differentials plunged into a negative
territory on Aug. 11.
The gasoil market has firmed in recent weeks,
thanks to reviving demand from India and China, but analysts have warned that
increased refinery runs and reimposed lockdowns in several other key markets
would pressurise refining margins and prices in the near term.
Refining
margins, also known as cracks, for 10 ppm gasoil were at USD6.25 a barrel over
Dubai crude during Asian trading hours, down from a more than four-month high of
USD6.54 per barrel on Friday. Cracks for the benchmark gasoil grade in Singapore
have more than doubled in the last two months, but they are still currently
about 57% lower than their historical average for this time of the year,
Refinitiv Eikon data showed.
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. |
