Refinery boom threatens margins - Moody's

30 January 2008 22:09  [Source: ICIS news]

HOUSTON (ICIS news)--A recent surge in refinery expansion could pressure margins, Moody's Investors Service said in a report released on Wednesday.

If refiners do not cancel or delay their expansions, crude distillation capacity could increase by more than 16m bbl/day by the end of the next decade, Moody's said.

Refiners are expanding due to a four-year period of strong refining margins, which occurred while little new capacity was added, Moody's said.

Moody's has predicted that refining margins have already peaked. By 2009, the new capacity could increase margin risk.

By 2010, mid-cycle margins could fall to $3-$9/bbl, Moody's said. The low end represents margins before 2000, while the upper end was the average for 2003-2007.

Moody's said the greatest risk for overexpansion is in the Middle East and southern and eastern Asia. The Middle East plans to add more than 5m bbl/day of capacity, while the southern and eastern portions of Asia plan to add more than 4m bbl/day.

While the new capacity could squeeze margins, it should not lead to the glut experienced during the 1980s and 1990s, Moody's said.

By: Al Greenwood
+1 713 525 2653

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 3 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly