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Asia Distillates-Jet margins drop but still near multi-month highs

October 19/2021

MOSCOW (MRC) -- Asia's jet fuel refining margins slipped to USD13.42 a barrel on Friday, but were just 8 cents shy of a near two-year high reached in the previous week, reported Reuters with reference to Refinitiv data in Eikon.

This came as oil prices hit a fresh three-year high on Friday, climbing above USD85 a barrel on forecasts of a supply deficit over the next few months as rocketing gas and coal prices stoke a switch to oil products.

Asian refining margins for jet fuel have climbed in October to their highest levels since January 2020 as air travel demand recovers in Asia, according to analysts and Refinitiv data.

Asia-Pacific nations, home to some of the world's strictest pandemic-related travel rules, are gradually easing border restrictions resulting in a surge in flight bookings and travel enquiries.

The recovery in aviation fuel demand coincides with the peak heating season for kerosene - which belongs to the same grade of refined oils - lifting the outlook for the middle distillate fuel which has been the biggest drag on global oil refiners' margins since 2020.

Jet refining margins have also surged in Europe to their highest since the first quarter of 2020 amid a boost to air travel, while excess supplies disappeared as refiners cut output of the fuel, the International Energy Agency said in its monthly report on Thursday.

Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell 2% to a three-week low of 1.99 MM tons in the week ended Oct. 14, according to Dutch consultancy Insights Global.

We remind that 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 also 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% 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 the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.


mrcplast.com
Author:Margaret Volkova
Tags:Asia, Europe, North America, crude and gaz condensate, propylene, ethylene, petrochemistry, PetroChina, China, Russia.
Category:General News
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