MOSCOW (MRC) -- Asian refining margins for 10-ppm gasoil slipped in late December, weighed down by concerns that near-term supplies on the back of high regional refinery runs would weaken market fundamentals, reported Reuters.
Although gasoil demand has improved in recent weeks, renewed lockdown measures in several markets to contain a new variant of the coronavirus are expected to dampen the pace of recovery in coming weeks, market watchers said.
Refining margins, also known as cracks, for 10-ppm gasoil were at USD6.21 a barrel over Dubai crude during Asian trading hours on 30 December, down from USD6.53 per barrel a day earlier.
Cracks for the benchmark gasoil grade in Singapore have gained 17.6% in the past month, but they were still about 57% lower than their seasonal average for this time of the year, Refinitiv Eikon data showed.
The front-month time spread for 10-ppm gasoil in Singapore, which has narrowed its contango by nearly 70% this month, traded at a discount of 15 cents per barrel on 30 December.
The flattening contango structure would encourage traders to liquidate gasoil stocks from storages, putting pressure on the market and capping any major upside for the refining profits in the first half of 2021, industry analysts said.
Middle-distillate inventories in the Fujairah Oil Industry Zone dropped 8.2% to 5.03 million barrels in the week ended Dec. 28, data via S&P Global Platts showed.
The weekly stocks in Fujairah have averaged 4.2 million barrels in late December, 2020, compared with the weekly average of 2.4 million barrels in 2019, Reuters calculations showed.
US distillate stockpiles fell by 1.9 million barrels in the week to Dec. 25, counter to expectations for a build of 529,000 barrels, data from industry group the American Petroleum Institute (API) showed on 29 December.
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 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.
MRC