MOSCOW (MRC) -- Asian jet fuel refining margins dropped on Friday, posting their third consecutive weekly decline, weighed down by persistent weakness in aviation demand, reported Reuters.
Refining profit margins, also known as cracks, for jet fuel were at USD3.53 per barrel over Dubai crude during Asian trading hours, 7 cents lower from Thursday.
The jet fuel cracks have dropped 13% this week, and remained nearly 70% lower than their five-year seasonal average for this time of the year, Refinitiv Eikon data showed. Prolonged international travel restrictions and sluggish pace of vaccinations in several markets have impacted the aviation demand recovery, while the recent strength in feedstock crude prices have hurt the refining margins, trade sources said.
The aviation market is expected to gradually strengthen in coming months as countries lift border restrictions, but a majority of market watchers believe it would take years for the sector to reach pre-pandemic levels. "I think the aviation sector needs more time to achieve a sustainable or stable recovery. Global vaccines rollouts definitely need more than six months," a Singapore-based trader said. "Our lives, be it personal or for business are never going to be the same as before. We cannot just grab our bags and fly anywhere we want, without having to worry if the place is safe enough." The regional jet fuel market, however, is getting some support as supplies are currently limited with refineries in South Korea not running high and some refineries in Japan scheduled to undergo spring maintenance, traders said.
Cash discounts for jet fuel widened by 10 cents on Friday to 80 cents per barrel to Singapore quotes, the biggest discounts since Oct. 22.
ARA INVENTORIES - Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub dropped 4.8% to 2.4 million tonnes in the week to March 11, data from Dutch consultancy Insights Global showed. - The data showed ARA jet fuel inventories rose 0.6% to 964,000 tonnes.
TENDERS - Sri Lanka's Ceylon Petroleum Corp (Ceypetco) is seeking gasoil for delivery into Colombo over the eight months between June and January 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 polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 241,030 tonnes in January 2021 versus 217,890 tonnes a year earlier. Only shipments of low density polyethylene (LDPE) and high density polyethylene (HDPE) increased. At the same time, PP shipments to the Russian market reached 141,870 tonnes in January 2021 versus 123,520 tonnes a year earlier. Supply of homopolymer PP and PP block copolymers increased.
MRC