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Asia distillates-gasoil cracks climb amid hopes for stronger demand

February 16/2021

MOSCOW (MRC) -- Asian refining margins for 10 ppm gasoil rose on Monday, hovering close to multi-month highs touched last week, buoyed by expectations for firmer demand and tighter supplies in coming months, reported Reuters.

Refining margins, also known as cracks, for 10 ppm gasoil climbed to USD7.34 per barrel over Dubai crude during Asian trading hours, compared with USD7.01 a barrel in the last trading session on Thursday. Cracks for the benchmark gasoil grade in Singapore have surged 22.7% so far this month, Refinitiv Eikon data showed.

The regional gasoil market is expected to strengthen further as countries roll out wider vaccinations in coming days that would boost economic recovery and fuel demand, market watchers said. Cash differentials for gasoil with 10 ppm sulfur content were at a narrow premium of USD0.01/bbl to Singapore quotes, compared with a discount of $0.04/bbl on Thursday.

Global oil and fuel prices are picking up as demand returns to pre-pandemic levels amid easing coronavirus lockdowns in key countries like China and India and signs of increasing road travel in several countries. However, there are questions over how quickly refiners with idled capacity can respond to increased demand. Analysts say the recovery pace will vary by region and fuel type, and that jet fuel demand will remain the weakest performer until more international air travel resumes.

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 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).


mrcplast.com
Author:Margaret Volkova
Tags:Asia, Europe, PP, PE, crude and gaz condensate, PP random copolymer, propylene, LDPE, HDPE, ethylene, medicine, petrochemistry, PetroChina, China, United Arab Emirates (UAE), Russia.
Category:General News
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