Refiners worldwide are struggling to meet global demand for diesel and gasoline, exacerbating high prices and aggravating shortages from big consumers like the United States and Brazil to smaller countries like war-ravaged Ukraine and Sri Lanka, said Hydrocarbonprocessing.
World fuel demand has rebounded to pre-pandemic levels, but the combination of pandemic closures, sanctions on Russia and export quotas in China are straining refiners' ability to meet demand. China and Russia are two of the three biggest refining countries, after the United States. All three are below peak processing levels, undermining the effort by world governments to lower prices by releasing crude oil from reserves.
Two years ago, margins for making fuel were in the dumps due to the pandemic, leading to multiple closures. Now, the situation has reversed, and the strain could persist for the next couple of years, keeping prices elevated.
"When the coronavirus pandemic occurred, demand for global oil was not expected to fall for a long time, and yet so much refining capacity was cut permanently," said Ravi Ramdas, managing director of energy consultancy Peninsula Energy. Global refining capacity fell in 2021 by 730,000 barrels a day, the first decline in 30 years, according to the International Energy Agency. The number of barrels processed daily slumped to 78 MMbpd in April, lowest since May 2021, far below the pre-pandemic average of 82.1 MMbpd.
Fuel stocks have fallen for seven straight quarters. So while the price of crude oil is up 51% this year, U.S. heating oil futures are up 71%, and European gasoline refining margins recently hit a record at USD40 a barrel.
The United States, according to independent analyst Paul Sankey, is "structurally short" on refining capacity for the first time in decades. U.S. capacity is down nearly 1 million barrels from before the pandemic to 17.9 MMbpd as of February, the latest federal data available.
LyondellBasell recently said it would shut its Houston plant that could process more than 280,000 bpd, citing the high cost of maintenance. Operating U.S. refiners are running full-tilt to meet demand, especially for exports, which have surged to more than 6 MMbpd, a record. Capacity use currently exceeds 92%, highest seasonally since 2017.
"It's hard to see that refinery utilization can increase much," said Gary Simmons, Valero chief commercial officer. "We've been at this 93% utilization; generally, you can't sustain it for long periods of time."
The U.S. ban on Russian imports has left refiners in the northeast United States short of feedstocks needed to make fuel. Phillips 66 has been running its 150,000-bpd catalytic cracker at its New Jersey refinery at reduced rates because it cannot source low-sulfur vacuum gasoil, according to two sources familiar with the matter.
As per MRC, LyondellBasell announced that Jiangsu Hongjing New Material Co. Ltd. will use its Lupotech T high-pressure polyethylene technology at a new facility. The process technology will be used for two 200 kiloton per year (KTA) vinyl acetate copolymer (EVA) lines. The facility will be located in the Lianyungang, Jiangsu Province, P.R. of China.
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 2,487,450 tonnes in 2021, up by 13% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market totalled 1,494.280 tonnes, up by 21% year on year. Deliveries of homopolymer PP and PP block copolymers increased, whreas shipments of PP random copolymers decreased significantly.
mrchub.com