Viewpoint: Capacity surge pressures Asian gasoline

  • Spanish Market: Oil products
  • 20/12/18

A surge in new refining capacity coming on line in Asia-Pacific will increase gasoline supplies and put pressure on refining margins in 2019.

Asia-Pacific refining capacity is expected to increase by about 1.6mn b/d in 2019, the largest growth in more than five years, according to Argus data.

New crude distillation units (CDU) in China, Malaysia, Brunei and Kuwait, and a new condensate splitter in Iran, are expected to boost regional gasoline supplies.

Gasoline refining margins have already taken a hit, falling into negative territory for the first time in seven years. Rising supplies from the new 200,000 b/d Nghi Son refinery in Vietnam and the return of gasoline production units at state-owned Mideast Gulf refiners Kuwait's KPC and Abu Dhabi's Adnoc has weighed on the market in recent months.

China adds supply

Chinese gasoline exports have been rising steadily in 2018, supported by the start-up of state-controlled PetroChina's 260,000 b/d Anning refinery and a 200,000 b/d expansion at state-owned CNOOC's Huizhou operations. Exports are on course to rise even further, as the increase in Chinese gasoline production is expected to outstrip the growth in apparent demand for the fuel.

Two major new private-sector refineries are scheduled to start-up in China in the coming months — Hengli's 400,000 b/d Dalian Changxing plant and Zhejiang Petroleum and Chemical's 400,000 b/d Zhoushan operations. The capacity additions come as China's apparent gasoline demand in January-October 2018 increased just 4pc from the same period a year earlier to 2.94mn b/d.

In southeast Asia, Malaysia's refining capacity will increase by more than 50pc from current levels of about 550,000 b/d when state-owned Petronas brings its 300,000 b/d Rapid refinery on line. The refinery, which is expected to begin production by the first quarter of 2019, has already taken its first Mideast Gulf crude for commissioning.

Mideast Gulf deficit shrinks

The Mideast Gulf, a net importer of gasoline, will add supplies in 2019 as three new projects are scheduled to start. The region is short of about 100,000-200,000 b/d of gasoline, but this could drop to about 50,000-100,000 b/ next year, according to Argus projections.

KPC's $16bn clean fuels project will integrate the 265,000 b/d Mina Abdullah and 440,000 b/d Mina al-Ahmadi refineries, raising combined capacity to 800,000 b/d. State-owned Saudi Aramco's new 400,000 b/d Jizan refinery is scheduled to ramp up to capacity in the first half of 2019, while Iran is expected to start its third 120,000 b/d Persian Gulf star condensate splitter in the same period. The new splitting capacity will produce Euro-5 compliant gasoline as Iran works towards being self-sufficient in the fuel.

Regional balance

The increase in Chinese supply, and the narrowing of the Mideast Gulf's deficit of the fuel, will add to availability and threatens to further weigh on prices. But balancing factors could emerge. Indian refineries are planning to undertake upgrades next year as they look to produce Bharat Stage-6 fuels — equivalent to the Euro-6 vehicle emissions standards — from 2020.

India is a large and growing gasoline consumer, with consumption at around 500,000-600,000 b/d, according to oil ministry data. Indian state-controlled refiners, including public-private sector projects, operate 3.2mn b/d of the country's total 4.95mn b/d capacity. The government, under pressure from the Supreme Court, decided to advance the launch of transport fuels with less than 10ppm sulphur by two years to 2020.

Private-sector refiner Reliance Industries and state-controlled IOC and HPCL plan to take their refineries or secondary units off line for partial shutdowns in 2019, as they undergo modifications to produce 10ppm compliant fuels before the 2020 deadline.

The Indian shutdowns could help mitigate the impact of the surge in new capacity. And there is the possibility that refiners in China and elsewhere could tweak their production yields to raise output of diesel to meet demand from the International Maritime Organisation's 0.5pc sulphur cap on marine fuels, which comes into force in 2020. But these factors look unlikely to fully offset the big rise in new supply.


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03/05/24

Dutch FincoEnergies supplies B100 biodiesel to HAL

Dutch FincoEnergies supplies B100 biodiesel to HAL

London, 3 May (Argus) — Dutch supplier FincoEnergies has supplied shipowner Holland America Line (HAL)with B100 marine biodiesel at the port of Rotterdam for a pilot test. This follows a collaboration between HAL, FincoEnergies' subsidiary GoodFuels, and engine manufacturer Wartsila to trial blends of B30 and B100 marine biodiesel . HAL's vessel the Rotterdam bunkered with B100 on 27 April before embarking on a journey through the Norwegian heritage fjords to test the use of the biofuel. The vessel will utilise one of its four engines to combust B100, which will reportedly cut greenhouse gas (GHG) emissions by 86pc on a well-to-wake basis compared with conventional fossil fuel marine gasoil (MGO), according to GoodFuels. There is no engine or fuel structure modification required for the combustion of B100, confirmed HAL. The B100 marine biodiesel blend comprised of sustainable feedstock such as waste fats and oils. The firms did not disclose how much B100 was supplied, or whether this is the beginning of a longer-term supply agreement. Argus assessed the price of B100 advanced fatty acid methyl ester (Fame) 0°C cold filter plugging point dob ARA — a calculated price which includes a deduction of the value of Dutch HBE-G renewable fuel tickets — at an average of $1,177.32/t in April. This is a premium of $410.20/t to MGO dob ARA prices for the same month, which narrows to $321.68/t with the inclusion of EU emissions trading system (ETS) costs for the same time period. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US job growth nearly halved in April: Update


03/05/24
03/05/24

US job growth nearly halved in April: Update

Adds services PMI in first, fifth paragraphs, factory PMI reference in sixth paragraph. Houston, 3 May (Argus) — The US added fewer jobs in April as the unemployment rate ticked up and average earnings growth slowed, signs of gradually weakening labor market conditions. A separate survey showed the services sector contracted last month. The US added 175,000 jobs in April, the Labor Department reported today, fewer than the 238,000 analysts anticipated. That compared with an upwardly revised 315,000 jobs in March and a downwardly revised 236,000 jobs in February. The unemployment rate ticked up to 3.9pc from 3.8pc. The unemployment rate has ranged from 3.7-3.9pc since August 2023, near the five-decade low of 3.4pc. The latest employment report comes after the Federal Reserve on Wednesday held its target lending rate unchanged for a sixth time and signaled it would be slower in cutting rates from two-decade highs as the labor market has remained "strong" and inflation, even while easing, is "still too high". US stocks opened more than 1pc higher today after the jobs report and the yield on the 10-year Treasury note fell to 4.47pc. Futures markets showed odds of a September rate cut rose by about 10 percentage points to about 70pc after the report. Services weakness Another report today showed the biggest segment of the economy contracted last month. The Institute for Supply Management's (ISM) services purchasing managers index (PMI) fell to 49.4 in April from 51.4 in March, ending 15 months of expansion. The services PMI employment index fell to 45.9, the fourth contraction in five months, in today's report. Readings below 50 signal contraction. On 1 May, ISM reported that the manufacturing PMI fell to 49.2 in April, after one month of growth following 16 months of contraction. In today's employment report from the Labor Department, average hourly earnings grew by 3.9pc over the 12 month period, down from 4.1pc in the period ended in March. Job gains in the 12 months through March averaged 242,000. Gains, including revisions, averaged 276,000 in the prior three-month period. Job gains occurred in health care, social services and transportation and warehousing. Health care added 56,000 jobs, in line with the gains over the prior 12 months. Transportation and warehousing added 22,000, also near the 12-month average. Retail trade added 20,000. Construction added 9,000 following 40,000 in March. Government added 8,000, slowing from an average of 55,000 in the prior 12 months. Manufacturing added 9,000 jobs after posting 4,000 jobs the prior month. Mining and logging lost 3,000 jobs. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US job growth nearly halved in April


03/05/24
03/05/24

US job growth nearly halved in April

Houston, 3 May (Argus) — The US added fewer jobs in April as the unemployment rate ticked up and average earnings growth fell, signs of gradually weakening labor market conditions. The US added 175,000 jobs in April, the Labor Department reported today, fewer than the 238,000 analysts anticipated. That compared with an upwardly revised 315,000 jobs in March and a downwardly revised 236,000 jobs in February. The unemployment rate ticked up to 3.9pc from 3.8pc. The unemployment rate has ranged from 3.7-3.9pc since August 2023, near the five-decade low of 3.4pc. The latest employment report comes after the Federal Reserve on Wednesday held its target lending rate unchanged for a sixth time and signaled it would be slower in cutting rates from two-decade highs as the labor market has remained "strong" and inflation, even while easing, is "still too high". US stocks opened more than 1pc higher today after the jobs report and the yield on the 10-year Treasury note fell to 4.47pc. Futures markets showed odds of a September rate cut rose by about 10 percentage points to about 70pc after the report. Average hourly earnings grew by 3.9pc over the 12 month period, down from 4.1pc in the period ended in March. Job gains in the 12 months through March averaged 242,000. Gains, including revisions, averaged 276,000 in the prior three-month period. Job gains occurred in health care, social services and transportation and warehousing. Health care added 56,000 jobs, in line with the gains over the prior 12 months. Transportation and warehousing added 22,000, also near the 12-month average. Retail trade added 20,000. Construction added 9,000 following 40,000 in March. Government added 8,000, slowing from an average of 55,000 in the prior 12 months. Manufacturing added 9,000 jobs after posting 4,000 jobs the prior month. Mining and logging lost 3,000 jobs. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Canadian rail workers vote to launch strike: Correction


02/05/24
02/05/24

Canadian rail workers vote to launch strike: Correction

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Shell's 1Q profit supported by LNG and refining


02/05/24
02/05/24

Shell's 1Q profit supported by LNG and refining

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