IEA cuts 3Q refinery throughput projection

The IEA has cut its forecasts for third-quarter global refining throughput, citing a steep fall in China's processing activity in July and the after-effects of Hurricane Ida on the US Gulf coast industry this month.

In its latest monthly Oil Market Report (OMR), the IEA said it sees throughput this quarter at 78.5mn b/d, a cut of 830,000 b/d from its prior projection.

Chinese throughput fell by 900,000 b/d in July, the agency said, to 13.9mn b/d, the lowest since May 2020 and 10,000 b/d below the year-earlier level.

"The surprisingly large month-on-month fall in China more than offset an otherwise solid increase in run rates for the rest of the world", the IEA said. "For the first time since 2009, global refining throughput failed to ramp up in July."

A partial recovery in China, and a seasonal increase in Europe, pushed global throughputs up by 1mn b/d to 79.1mn b/d in August, but US refinery activity was hit by Hurricane Ida at the end of that month. Some of the region's facilities are still disrupted, with the IEA noting that 700,000 b/d of capacity remained shut as of 12 September. It forecasts US runs will fall by 400,000 b/d month on month in September, having dropped by 170,000 b/d in August.

The combination of lower Chinese runs in July and hurricane-related outages in August and September meant that the IEA revised the quarterly increase in throughput to 1.5mn b/d in the period, compared with a 1.8mn b/d increase in the April-June period.

The agency said it expects refining activity to remain held back into next year.

"Refiners globally seem more financially disciplined this year and less eager to ramp up runs when demand growth is periodically set back by pandemic-control measures," it said, cautioning that the demand recovery is itself "uneven across both regions and products".

It forecasts Indian demand growth this year to be limited to two-thirds of the amount lost in 2020, and for Covid-19 lockdowns in the rest of Asia-Pacific, excluding China, to result in demand regaining just 43pc of that year's falls. It does not expect a full recovery in that region until 2022. In Europe, a "mere" 40pc recovery will be achieved in 2022.

By Harry Riley-Gould