PODCAST: Petrochemicals will feel the heat as older refineries close, mega-refineries open

BARCELONA (ICIS)–Petrochemical producers will come under increasing feedstock pressure as older refineries close and a new wave of mega-refineries in the Middle East and Asia open.

• With demand fairly flat, more older/smaller refineries will close
• Europe, US chemicals will face fierce competition from Asia, Middle East mega-refineries
• Mega-refineries will add 4-5m bbl/day of capacity
• Refinery closures will pressure naphtha supply
• Poor jet fuel demand holding back refinery sector recovery
• Around 500,000 bbl/day of permanent closures in Europe in the last year
• At least five more refineries still idled
• Forecast recovery to only 90% of 2019 levels, may never fully recover
• Naphtha is tight due to strong petrochemical and gasoline demand
• Very strong driving season forecast in US and Europe thanks to “staycations”
• OPEC+ production cuts have helped push oil price up
• Now in reverse with 650,000 bbl/day extra production from OPEC+ in June
• Strong bounce back in demand as economies recover
• OPEC+ is fragile, ICIS forecasts $68/bbl average for 2021
• US shale production capped at 11m bbl/day, damaged by pandemic losses
• US no longer the world’s swing producer, starved of investment
• Logistics, supply chain crisis likely to persist until developing world vaccinated
• Unprecedented price differentials between regions

Will Beacham interviews  John Richardson, ICIS senior consultant Asia,  Ajay Parmar, ICIS senior analyst for short-term price forecasting, and Michael Connolly, ICIS oil refining analyst.

Editor’s note: This podcast is an opinion piece. The views expressed are those of the presenter and interviewees, and do not necessarily represent those of ICIS.

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Read the latest issue of ICIS Chemical Business.

Read John Richardson’s ICIS blog.

Interview by Will Beacham