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MOSCOW (MRC) -- Global refinery
throughput is expected to rebound by 4.5 million b/d in 2021 after a 7.2 million
b/d drop in 2020, reported S&P Global
with reference to the International Energy Agency's statement Jan.
19.
IEA projects 78.9 million b/d throughput this year, versus 76.9
million b/d in 2020, when refinery rates were impacted by
COVID-19.
Refinery runs rose 2.6 million b/d in November 2020 to 76.1
million b/d, "the largest monthly gain in seven years," according to the IEA,
which attributed the increase to refineries returning "from peak
maintenance."
The expected increase of run rates in 2021 will be lower
than the 5.5 million b/d demand growth. However, the refined products stock
overhang from last year, when demand dropped by 8.8 million b/d, may be carried
this year due to the "relatively high proportion of LPG/ethane" in the demand
growth.
The 2020 imbalance between the reduction of throughput and demand
has resulted in "a large build in total product stocks."
The product
stocks overhang, which was mostly an aftermath of refiners overproducing in
April-May because of the "rapid fall of crude prices," is likely to act "as a
constant brake on the recovery in refinery margins."
If crude markets
tighten faster than products markets, refinery margins may fall in 2021 on
average, the IEA said.
In December 2020, the picture was mixed as gains
in crude prices were somewhat offset by "extreme winter weather in Europe and
Asia," which supported heating fuel cracks.
Cold weather in Asia boosted
demand for heating kerosene, which lent support to middle distillate cracks
"across all regions."
However, the steeper crude prices and higher
refinery runs drove fuel oil cracks lower.
US throughputs increased in
December and early January but "are likely to stagnate until a stronger demand
recovery takes hold" in the second quarter. For 2020, runs fell 2.3 million b/d,
at par with the demand drop.
Last year had an "uneven impact" on European
refineries, the IEA said, adding that only in Germany and the Netherlands
throughputs were back in their seasonal range by the fourth quarter, "but
remained significantly below the seasonal levels elsewhere."
The lowest
capacity utilization was recorded in France, where it fell to 55% in 2020. Italy
and Portugal also recorded utilization below 70%-64% and 66%,
respectively.
With new COVID-19 restrictions taking place, first quarter
runs are forecast to fall 1.1 million b/d in Europe.
In Japan, refinery
runs started increasing in November and were up in December on seasonally
stronger winter demand, but activity in South Korea "stagnated" in November when
steam cracker maintenance affected demand for naphtha and refinery
margins.
Runs increased in China by 400,000 b/d in 2020, "the lowest
annual gain in four years, but an impressive result compared to declines
elsewhere."
India's state-owned refineries that serve the domestic market
were back to their year-earlier utilization whereas the export-oriented ones
retained lower rates.
Runs in Saudi Arabia averaged 68% in 2020 but are
expected to increase to 77% in 2021.
Russia's throughput was 320,000 b/d
down in 2020, outpacing the 150,000 b/d demand decline.
As MRC wrote earlier, oil
producers face an unprecedented challenge to balance supply and demand as
factors including the pace and response to COVID-19 vaccines cloud the outlook,
according to an official with International Energy Agency's (IEA)
statement.
We remind that the
COVID-19 outbreak has led to an unprecedented decline in demand affecting all
sections of the Russian economy, which has impacted the demand for
petrochemicals in the short-term. However, the pandemic triggered an increase in
the demand for polymers in food packaging, and cleaning and hygiene products,
according to GlobalData, a leading data and analytics company. With Russian
petrochemical companies having the advantage of access to low-cost feedstock,
and proximity to demand-rich Asian (primarily China) and European markets for
the supply of petrochemical products, these companies appear to be
well-positioned to derive full benefits from an improving market environment and
global economy post-COVID-19, says GlobalData.
We also remind that in
December 2020, Sibur, Gazprom Neft, and Uzbekneftegaz agreed to cooperate on
potential investments in Uzbekistan including a major expansion of
Uzbekneftegaz’s existing Shurtan Gas Chemical Complex (SGCC) and the proposed
construction of a new gas chemicals facility. The signed cooperation agreement
for the projects includes “the creation of a gas chemical complex using
methanol-to-olefins (MTO) technology, and the expansion of the production
capacity of the Shurtan Gas Chemical Complex”.
Ethylene and propylene are
feedstocks for producing polyethylene (PE) and polypropylene
(PP).
According to MRC's DataScope report,
PE imports to Russia decreased in January-November 2020 by 17% year on year and
reached 569,900 tonnes. High density polyethylene (HDPE) accounted for the
greatest reduction in imports. At the same time, PP imports into Russia
increased by 21% year on year to about 202,000 tonnes in the first eleven months
of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase
in imports. |
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