22 March 2010 18:56 [Source: ICIS news]
PHOENIX (ICIS news)--Ethanol will meet any ensuing US gasoline demand growth as the economy recovers, offering no respite for struggling refiners, downstream consultant Alan Gelder of analysis firm Wood Mackenzie said on Monday.
Addressing attendees at the 108th annual meeting of the National Petrochemical and Refiners Association (NPRA), Gelder said that while conventional wisdom suggested projections of recovering economic growth in 2010 should support an improvement in margins, growing use of ethanol in the domestic gasoline pool will cut into those gains.
“We expect ethanol to supply the projected recovery and growth in gasoline demand in compliance with the renewable fuels regulations, so there is limited demand upside for refinery-based gasoline,” Gelder said.
Both US and European refineries are suffering, Gelder said, sharing a common threat on the supply side as 6m bbl/day of spare capacity was introduced into the global refining system in 2009.
“Depending upon refinery configuration, 2010 margins could be weaker than 2009. Longer term, margins are anticipated to recover, making near-term survival imperative,” Gelder said.
Wood Mackenzie’s preliminary estimates of refineries indicated that almost the entire fourth quartile was cash negative during 2009, Gelder said.
“Refiners need to understand the position of their assets in the extended value chain against local and international competitors under various market landscapes,” he said.
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