MOSCOW (MRC) -- More crude oil was being refined in China's refineries in April 2020 than in US refineries for the first month on record, and this trend continued for all remaining months in 2020 except for July and August, according to Hydrocarbonprocessing.
Thus, China processed more crude oil than the United States not only because of the unique effects of COVID-19 pandemic-related restrictions in 2020, but also because of differences in the longer-term structural refining trends between the two countries.
China’s National Bureau of Statistics only reports the country’s processing volume of crude oil. The most direct comparison to the United States is refiner net inputs of crude oil. US refiners also report total gross inputs into distillation units, which include non-crude liquids such as lease condensate and unfinished oils, making gross inputs about 0.5 million barrels per day (b/d) larger than net crude oil inputs. China’s crude oil processing also exceeded US gross inputs in both May and October 2020.
April 2020 was the first full month for the United States in which responses to the COVID-19 pandemic reduced demand for petroleum products such as gasoline, distillate, and jet fuel. Although net inputs of crude oil to US refiners had seen record declines in April, China’s crude oil processing began increasing above previous levels following a demand increase when COVID-19 cases declined in that country.
China’s refinery runs also started to rise in April 2020 partially because China implemented a policy in 2016 that encourages refiners to refine more petroleum products by fixing product prices at USD40 when the Brent crude oil price falls to less than USD40 per barrel (b). The Brent crude oil price fell and remained less than USD40/b between March and May 2020.
While China processed a record 14.1 million b/d of crude oil in June and further rose to 14.5 million b/d in November, US refinery runs have not yet returned to their March 2020 levels because of a combination of demand reductions and hurricanes in the fall that disrupted refinery processes. Hurricanes Laura and Sally in late August and September, respectively, and Hurricanes Delta and Zeta in October resulted in refinery shut-ins on the Gulf Coast, where more than half of US refining capacity is located. Although some refineries came back online in late 2020, US refinery runs remained lower than historical averages in 2020.
We remind that as MRC informed before, the largest US refinery, Motiva Enterprises’ 607,000 barrel-per-day Port Arthur, Texas, plant, returned to normal operations. The refinery was shut on Feb. 15 when freezing temperatures, rarely seen on the US Gulf Coast, knocked out steam supply. Motiva began restarting the refinery on Feb. 24.
Motiva Chemicals has also resumed operations at its mixed-feed cracker in Port Arthur, USA. The process of restart of this cracker with the capacity of 635,000 mt/year of ethylene and 340,000 mt/year of propylene began on 27 February, 2021, and finished late last week. The cracker wa shut along with the refinery at the same site on 14 February, 2021, because of the deep freeze.
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