MOSCOW (MRC) -- Asian refining margins for 10 ppm gasoil rose on Friday, posting their seventh consecutive weekly gain, but the pace of demand recovery is expected to take a hit as several regional economies continue to battle COVID-19 infections, reported Reuters.
Refining margins, or cracks, for 10 ppm gasoil rose 25 cents to USD6.04 a barrel over Dubai crude during Asian trade, lingering close to a multi-month high of USD6.40 touched earlier in the week. "I don't see much movement in the (gasoil) cracks in the last month of 2020. This is because the hope for next year will prevent downside," said Sukrit Vijayakar, director of energy consultancy Trifecta. "There will be no change in physical demand immediately. And traders are not likely to lay on fresh positions this late in the year."
Cracks for the benchmark gasoil grade in Singapore have increased 2.7% this week, which is a weaker growth compared to a 16% rise last week, Refinitiv Eikon data showed. The slowdown in demand from renewed lockdown measures in some markets would increase the regional gasoil surplus, market watchers said, while India's gasoil exports are expected to be elevated in coming weeks with strong refinery runs in the country. Diesel exports from India this month are well on track to exceed November's 2.2 million tonnes, Refinitiv oil research assessments showed. Cash discounts for gasoil with 10 ppm sulphur content were at 11 cents a barrel to Singapore quotes on Friday, compared with a 8-cent discount a day earlier.
Gasoil stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub rose 5.4% to 2.6 million tonnes in the week to Dec. 10, data from Dutch consultancy Insights Global showed. - The data showed ARA jet fuel inventories climbed 11.8% to 995,000 tonnes. - Compared with a year earlier, ARA gasoil inventories gained 6.6%, while jet fuel stocks rose 47.2%.
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 PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased. At the same time, PP shipments to the Russian market reached 978,870 tonnes in January-October 2020 (calculated using the formula: production minus exports plus imports minus producers' inventories as of 1 January, 2020). Supply of exclusively of PP random copolymer increased.
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