Crude, Oil, Refinery, Naphtha

Market Overviews

Bunker oil

 
Updated to Q4 2014

China’s bunker oil demand is expected to decline in the fourth quarter of 2014.

China will have a National Day Holiday in October, and most market participants will retreat from the market. As a result, market will be quiet with thin activities, and China’s bunker sales are expected to reduce. Demand is likely to become better in November, and then in December, demand will become weaker because of the Christmas Day Holiday in the nearby countries.

There will be a favourable factor to China’s market in the fourth quarter. Some ports in Russia will be frozen in the winter season, and some demand there is expected to move to China. However, this will not have a great impact, since the shipping market should remain weak in 2014.

China’s bunker oil demand is expected to decline in the fourth quarter of 2014.

China will have a National Day Holiday in October, and most market participants will retreat from the market. As a result, market will be quiet with thin activities, and China’s bunker sales are expected to reduce. Demand is likely to become better in November, and then in December, demand will become weaker because of the Christmas Day Holiday in the nearby countries.

There will be a favourable factor to China’s market in the fourth quarter. Some ports in Russia will be frozen in the winter season, and some demand there is expected to move to China. However, this will not have a great impact, since the shipping market should remain weak in 2014.

Crude

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SINGAPORE (ICIS)–Spot prices of some petrochemicals in Asia spiked on Tuesday with crude prices trading at near four-year highs ahead of the… Tue, 02 Oct 2018

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SINGAPORE (ICIS)–Here are some of the top stories from ICIS Asia and the Middle East for the week ended 28 September. Asia BD wide buy-sell gap…Mon, 01 Oct 2018

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Crude oil majors commit to reduce methane emissions by a fifth

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Ethanol

 
Updated to Q3 2018

Asia

supply from Brazil increases but supply from Pakistan tightens due to most sellers having sold all their stockpiles. US fuel ethanol supply expected to be stable as harvest continues. Market to eye trade tensions and higher tariffs in US-China dealings.

Asia’s demand for US-origin fuel-grade ethanol imports are forecast to remain tepid as the Philippines looks to further support its domestic ethanol industry. China and India were heard to be increasing demand for fuel ethanol imports but rising trade tensions with the US could counter that.

Europe

Supply for fuel ethanol could fall in the coming quarter, but this is unlikely to have a major upward impact on prices unless prolonged maintenances or unplanned incidents interrupt production. This is because volumes are still likely to be high relative to demand, which itself could fall at the end of the quarter.

Growing year-on-year demand in some countries will not prevent some price volatility; higher supply relative to demand continues to make this a buyers’ market. At the end of the third quarter, the second quota-free harvest begins, so players will be looking at 2019 supply expectations. This could also have a peremptory impact on prices as demand drops after the driving season.

Latin America

Brazilian ethanol supply during the third quarter will increase in line with the seasonal progression of the 2018/2019 sugarcane harvest/crush which started in April. Excluding rainy weather, which slows processing, crushers will increase processing every week in line with seasonal norms. The sugarcane harvest in the centre-south runs from April to November or December.

Demand will be mixed during the third quarter as the country uses hydrous ethanol as a stand-alone fuel in flexible-fuel vehicles (FFVs), competing directly with gasoline. Many Brazilian drivers own flex-fuel cars which allow switching from gasoline to ethanol. Drivers only substitute for ethanol if its price is less than 70% that of gasoline.

US

Fuel ethanol production is projected to continue growing, as production in the Midwest continues to strengthen to keep up with robust demand. Industrial ethanol supplies will tighten heading into the second half as acres dedicated to harvest production at the farm dipped and contract prices rose as a result of increased fuel and transport costs, according to producers.

Fuel ethanol demand will be robust but mostly steady, led by high gasoline demand in the US. However, demand pullback from US drivers due to rising gasoline and crude oil prices may tamper some consumption levels. Steady downstream demand in the industrial sector will keep demand mostly steady.

Feedstocks

 
Updated to Q3 2018

Europe

The availability of fuel oil, gasoil and vacuum gas oil in Europe is expected to remain constant in the coming quarter. However, it could see a boost as Europe’s refinery maintenance season ends bringing more barrels online.

The demand outlook for fuel oil, gasoil and vacuum gasoil in Europe is mixed going into the third quarter of 2018. Demand for VGO will depend on the US export demand, which has been lower but recently rebounded somewhat. Demand for fuel oil could rise as air conditioning demand rises, while gasoil could drop as higher summer temperatures kick in.

US

Ethane production is projected to grow by a further 500,000 b/d to the end of 2019, which bodes for quarter-on-quarter increases through the end of next year. Propane supply is also expected to continue to increase, driven by robust NGL production.

Ethane demand is expected to continue increasing as the new crop of steam crackers in the region ramp up production and start up. Propane demand in the US will be healthy from the petrochemical industry for on-spec propylene production, and robust demand on the international market will drive exports.

Fuel ethanol

 
Updated to Q4 2017

ASIA
Supply of fuel grade ethanol to Asia is expected to increase due to fewer cargoes being shipped to Brazil. Hydrous ethanol supply could also increase due to start of harvest season in Pakistan while Brazil supply is expected to also increase.

For Q4, Asia’s demand for US-origin fuel-grade ethanol imports are forecast to remain strong as regional production remains insufficient to meet fuel blending mandates though prices may be capped by an expected strong corn harvest in the US. Demand for hydrous ethanol is expected to improve due to expectations of higher demand for alcoholic beverages in NE Asia.

EUROPE
In the industrial and beverage grade Ethanol markets, stocks should begin low for fermentation grade producers and in particular beet ethanol plants, though should be replenished as the harvest campaign continues. Should lower imports continue, this could continue to restrict supply for 96% REN industrial grade. In the fuel ethanol market, players anticipate the harvest campaign could boost inventories by midway through the fourth quarter.

Demand for industrial and beverage grade ethanol is seen as healthy and stable in the fourth quarter. Fuel grade ethanol demand is expected to soften as winter is a low period for gasoline consumption, and therefore this affects fuel ethanol needs. The end of the quarter can sometimes experience a slight boost if blenders need to meet their environmental blending targets; it is not clear if this is a trend to be expected in 2017.

LATIN AMERICA
In the fourth quarter, the biodiesel industry will continue to face unprecedented uncertainty. The US Renewable Fuel Standard (RFS) biofuel volume mandate for 2017 took effect at the end of the first quarter, after a regulatory freeze introduced by the Trump administration expired.

There is concern over the point of obligation for blending and most market players do not want to see any change in 2017. The US National Biodiesel Board (NBB) filed an antidumping and countervailing duty petition with the US government to investigate imports from Argentina and Indonesia, saying they have violated trade laws by flooding the US market with dumped, subsidised biodiesel. The final decision for that trade fight should come in the fourth quarter.

US
Corn harvest is expected to be healthy so plenty of feedstock to produce the oxygenate.

Fuel demand typically drops in the last quarter of the year.

Gasoil

 
Updated to mid-Jan 2014

Gasoline retail prices posted eight rises and seven drops in 2013, in line with changes in the price of international crude. The wholesale gasoline price fell by Yuan (CNY) 272/tonne compared with a year ago, as alternative energy sources were developed and there was less speculation in the gasoline market.

Gasoline consumption was at a relatively high level during the period. Sales of gasoline-fueled vehicles in China increased by 15.7% year on year between January and December 2013, which pushed up gasoline consumption. But alternative energy markets expanded at the same time. According to a survey by ICIS C1 Energy, consumption of compressed natural gas (CNG) used in cars during 2013 was up by at least 20% compared with 2012. Meanwhile many market players switched their attention to gasoil rather than gasoline, so there was less speculation in the gasoline market.

On the supply side, Sinopec and PetroChina kept operating rates at subsidiary refineries relatively high, around 83-85%. Meanwhile, blended gasoline supply was ample, because Sinopec and PetroChina bought only a small amount of blended grades.

China’s gasoline production is expected to rise by about 8% year on year in 2014 as new refining capacities become operational. With the rise in demand for gasoline-fuelled vehicles, gasoline demand is expected to increase by 7.5%. However, the availability of alternative energy always affects the gasoline market, so we expect more gasoline to be exported in 2014.

Gasoline-naphtha-crude-MTBE

 
Updated to mid-Jan 2014

Gasoline retail prices posted eight rises and seven drops in 2013, in line with changes in the price of international crude. The wholesale gasoline price fell by Yuan (CNY) 272/tonne compared with a year ago, as alternative energy sources were developed and there was less speculation in the gasoline market.

Gasoline consumption was at a relatively high level during the period. Sales of gasoline-fueled vehicles in China increased by 15.7% year on year between January and December 2013, which pushed up gasoline consumption. But alternative energy markets expanded at the same time. According to a survey by ICIS C1 Energy, consumption of compressed natural gas (CNG) used in cars during 2013 was up by at least 20% compared with 2012. Meanwhile many market players switched their attention to gasoil rather than gasoline, so there was less speculation in the gasoline market.

On the supply side, Sinopec and PetroChina kept operating rates at subsidiary refineries relatively high, around 83-85%. Meanwhile, blended gasoline supply was ample, because Sinopec and PetroChina bought only a small amount of blended grades.

China’s gasoline production is expected to rise by about 8% year on year in 2014 as new refining capacities become operational. With the rise in demand for gasoline-fuelled vehicles, gasoline demand is expected to increase by 7.5%. However, the availability of alternative energy always affects the gasoline market, so we expect more gasoline to be exported in 2014.

Jet kerosene

 
Updated to Q2 2018

ASIA
Scheduled refinery maintenance particularly in northeast Asia is expected to result in supply tightening during the quarter. However, supply could start to rise and exceed demand requirements in May, as number of refineries come back on-stream. Much will depend on whether exports from China will increase as traders await news of second quarter export quotas. The arbitrage windows are likely to open up from the Middle East and possibly Asia to Europe and from northeast Asia to the US west coast later in the quarter as the peak summer travel season in the northern hemisphere approaches.

Demand is traditionally low in the first half of the quarter. However, it is expected to firm later in the quarter with increased air travel associated with public holidays in May as well as summer holiday demand in Asia in June and elsewhere in the northern hemisphere in July and August.

EUROPE
Jet fuel supply for Q2 2018 is expected to be seasonally boosted due to high flight season. Some market players take a bullish supply outlook as refineries come back online after maintenance season and higher numbers of imports are arriving in the coming months compared to Q1.

Demand for European jet fuel is set to increase in Q2 2018 as high flight season gets underway. Although most consumers purchase the fuel on a contractual basis, the spot market could see a boost in activity as demand ramps up for passenger air travel.

Naphtha

 
Updated to Q3 2018

Asia

Market expectations of greater western arbitrage arrivals to Asia weighed on sentiment moving into the third quarter, adding to otherwise ample supply. An estimated near 1.4m tonnes of deep-sea naphtha is poised to reach Asia in the early part of the third quarter, up from average monthly estimates at around 1-1.2m tonnes.

Northeast Asian end-user demand for petrochemical production is expected to stay healthy, which could help absorb regional supply amid expectations of increased deep-sea cargo flows from the west. Steady downstream olefins demand saw a majority of northeast Asia producers keeping cracker operating rates high or optimum output.

Europe

Supply of European naphtha is expected to remain constant or slightly increased for Q3 2018. A build up of premium grades in North West Europe due to a closed arbitrage to the US could persist. The Asian arbitrage is closed from North West Europe, further boosting supply. Refineries are coming back online after maintenance season, gradually increasing supply.

Demand for European naphtha from the petrochemical industry is not expected to increase in Q3 2018. Crackers currently opt for feedstocks butane and propane over naphtha due to more attractive pricing, and there are expectations that this will continue throughout the rest of the year. Demand for lighter grades could rise if the US arbitrage reopens.

Petroleum

 
Updated to mid-Jan 2014

Sinopec and PetroChina kept relatively high operating rates of 83-85% at subsidiary refineries. The gasoline output ratio was above 20% because of better margins than other products. Meanwhile, blended gasoline supply was ample, because Sinopec and PetroChina bought only a small amount of blended grades.

Gasoline consumption was at a relatively high level in the period. Gasoil demand declined in the China market during October-December 2013. The demand was stronger in both October and November but started falling in December, when the market remained basically balanced on the whole despite less supply from Sinopec refineries on crude pipeline blast in Qingdao. China’s gasoil demand growth is expected to be still not optimistic in 2014 and the exports may increase. In the first quarter of the year, which is usually the slack demand season because of the Lunar New Year holiday, gasoil supply may be in a glut.

Petroleum coke

 
Updated to Q4 2014

The average price of green petroleum coke is expected to remain stable or go down slightly in the fourth quarter.

GPC prices may see a small increase in October since supply got tighter after sharp declines in import volumes from June to September.

However, the upward trend may not last long. Supply may lose in the fourth quarter as refinery operating rates climb after some maintenance is completed.

In addition, import volumes may recover slightly. Since demand is expected to remain weak, prices may turn downward again once supply grows.

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