London +4420 814 42225
Moscow +7495 543 9194
Kiev +38044 599 2950
info@mrcplast.com

Our Clients

Order Informer

 
Home > News >
 

Petchems demand, gasoline blending to buoy European naphtha in 2021

March 04/2021

MOSCOW (MRC) -- Demand and supply growth for naphtha in European markets is likely to be moderate until at least the second quarter of 2021 as inventories are run down and deployment of a COVID-19 vaccine starts to make some headway in reviving oil products demand, according to Chemweek with reference to IHS Markit analysts.

Refinery margins in Europe are forecast to remain under pressure from stocks that have built up during the pandemic amid volumes flowing into the region from abroad. Despite low refinery run rates, European naphtha supplies will not be tight because of the imbalance in different refinery yields, says IHS Markit principal analyst Eleanor Budds.

We are forecasting refinery run rates to remain at similar levels in 2021 to 2020, with a utilization rate of below 80% on annual average, Budds says. Naphtha supply will be impacted, but as jet demand will remain low until the second half 2021, and then climb back gradually, refiners will continue to produce naphtha and diesel over jet, thus a shortage is not predicted, she adds.

Demand for naphtha will benefit from healthy Asian and European petrochemical sectors and an uptick in gasoline blending. Commencement of the vaccine program will allow the European naphtha market to tap into resurgent gasoline blend demand. IHS Markit forecasts an increase of over USD130/metric ton in the CIF Northwest European naphtha spot price by the second quarter of 2021 compared to the prior-year quarter.

Demand from the petchem sector, both in Europe and in Asia, will be supported by ongoing cracker run rates, Budds says. However, a source at a European oil major suggested that in the second half of 2021, the petchem sector will lose some of the packaging and home office boost seen in 2020.

For much of the fourth quarter of 2020 light-grade naphtha, predominantly as petchem feedstock, dominated the Asian region. A major Japanese market player said that there will be fewer steam cracker turnarounds in the first quarter of 2021 in Asia compared to 2020, supporting demand for the lighter grade as feedstock.

IHS Markit forecasts the combined Asian and Middle East regional net feedstocks shortfall will hit 2.9 million metric tons and 2.6 million metric tons in January and February, respectively.

In terms of import demand, naphtha is forecast to consolidate its position as the primary cracker feedstock in Asia, especially in early 2021, as demand for propane as a heating fuel during the colder months rises and strong petchems demand continues to support cracker margins.

Simultaneously, Middle East and Indian net export volumes are expected to ease due to restrained refinery run rates and increased domestic demand. Should long-range tanker freight rates continue rising from December into early 2021, coupled with narrow price differences between Europe and Asia, this could curb spot, as opposed to structural, arbitrage volumes sent east.

OPIS is an IHS Markit company.

As MRC informed earlier, PKN Orlen (Plock, Poland), the countrys largest petrochemicals producer, says higher margins and sales volumes boosted fourth-quarter EBITDA in its petchems business to 508 million zloty (USD137 million), up 187% year on year (YOY). Improved petchem margins compared to the prior-year period were enhanced by sales volumes in the quarter that rose 17% YOY to 1.4 million metric tons, according to the refining and energy group. Sales volumes for polyolefins rose 47% YOY, polyvinyl chloride (PVC) volumes soared by 115%, purified terephthalic acid (PTA) rose 15%, and fertilizers increased 12%, while olefins sales were broadly flat, it says.

We remind that the only Czech refinery and major petrochemical producer Unipetrol was renamed Orlen Unipetrol from 1 January, 2021. Unipetrol is 100% owned by the Orlen Group.

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2% year on year. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, polypropylene (PP) shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.


mrcplast.com
Author:Margaret Volkova
Tags:Europe, PP, crude and gaz condensate, PP random copolymer, propylene, LDPE, HDPE, ethylene, petrochemistry, PKN Orlen, Unipetrol, Poland, Russia, Czech Republic.
Category:General News
|
| More

Leave a comment

MRC help

 


 All News   News subscribe