A version of this Spotlight from S&P Global Platts Analytics was first published January 13th.
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For the week ending Jan. 15, global refinery downtime will remain largely unchanged at around 16.8 million b/d as many refiners are purposely running at lower rates amid weak demand and margins. For the week ending Jan. 22, overall downtime is anticipated to decrease modestly to 16.4 million b/d.
Refinery downtime remains elevated in East Asia as several refiners such as Taiwan's Formosa and South Korea's SK Energy are running at reduced rates (~60%) amid weak refining margins. This situation is also noticed in most other regions. South Africa's Durban and Cape Town both remain down.
We notice some continued recovery in product demand in China and India as refiners continued to ramp up. but the pace of recovery is certainly slowing as some independents are reducing operating rates and refiners in India are still running at lower rates compared to their historical averages. Many refineries are continuing to run at limited rates given the second/third round of lockdowns around the globe as COVID-19 infections surge. We expect only modest improvements over the next several weeks.
US: Identified normal maintenance turnarounds as well as unplanned outages and refinery run cuts will remain largely unchanged at around 4.19 million b/d for the week ending Jan. 15. Shell's Convent refinery is now considered shut down and modeled in as a closed refinery for our calculations. We forecast US downtime will remain elevated with slight softening to 4.16 million b/d for the week ending Jan. 22.
Middle East: Regional maintenance, idling and run cuts will remain at 400,000 b/d for the week ending Jan. 15. While we expect to see a gradual ramp-up at Syria's Homs refinery following its planned maintenance, we expect several refiners in the region to run at reduced rates for the near term. There is no major maintenance work for the next few weeks and as such, the regional outage level is expected to remain largely unchanged at around 400,000 b/d for the week ending Jan. 22. The most notable regional news would be the commissioning of the long awaited Jizan refinery, which is expected to occur this quarter.
Asia: SK Energy (South Korea) started the year at lower operations, reportedly running at 60% amid weak regional demand. Formosa's Mailiao (Taiwan) continues to have its 180,000 b/d distillation tower shut resulting in the regional refinery downtime rising to about 4.7 million b/d for the week ending Jan. 8, the highest level of the past few weeks. As China's Hengrunde Petrochemical and Maoming refining both restart following planned maintenance, the region's downtime will soften to around 4.6 million b/d for the week ending Jan. 15. While we expect both SK Energy and Formosa to run at reduced rates amid poor margins through Q1 2021, we still believe there will be some recovery in India. The gains will continue to be localized as several ex-China/India refiners will run at reduced rates; The Philippines' Limay (Bataan) refinery announced that it will be temporarily halting its operation from the second half of January 2021. Our analysis continues to show that the upside will be limited for refiners given the resurgent COVID-19 cases, putting pressure on demand. As such, we forecast regional refinery downtime will remain above 4 million b/d for the next several weeks.
NWE/MED: Total downtime will remain very high and show some increase for the week ending Jan. 15, reaching a level of 3.12 million b/d, or approximately 140,000 b/d higher than the previous week. Lockdowns in many countries in Western Europe continue because of surging COVID-19 cases, dampening any significant demand recovery. We do not expect any decrease in downtime next week. These levels include actual maintenance, unit idling, and discretionary run cuts, and each category is contributing significantly to the grand total. Refiners have decided to take some major turnarounds during the winter season, including ISAB Priolo Gargallo, ExxonMobil Fos, and Tupras Izmir. Major repairs continue at Gonfreville's fire-damaged CDU and Total Grandpuits (crude p/l repair).BP Gelsenkirchen completed a CDU turnaround last week, while a short unplanned shutdown took place at Total Feyzin. Refineries continue to idle some CDUs including Saras Sarroch, Repsol Tarragona, Petronor Bilbao, and ExxonMobil Fawley. Gunvor Antwerp and Total Donges continue to idle their entire refineries due to poor margins.
FSU: Total outages for the week ending Jan. 15 are expected to increase by 30,000 b/d to 750,000 b/d. Most of the downtime is now attributable to discretionary run cuts due to weak margins, and little of the downtime is associated with planned or unplanned maintenance. KazMunayGaz Atyrau experienced an unplanned shutdown due to a power outage associated with bad weather, while other refineries with recent turnaround work have restarted their units. Total outages for the week ending Jan. 22 are expected to show a 30,000 b/d decrease to a level of 720,000 b/d. Minimal maintenance is planned going forward during the winter months, but discretionary run cuts are expected to continue in order to manage comparatively low demand due to COVID-19 effects.
Latin America: PDVSA's Paraguana Refining Center is sustaining its operation at both Amuay and Cardon while running at 50,000 b/d and 110,000 b/d, respectively. PDVSA has also been sustaining one of the CDUs at Puerto La Cruz at 54,000 b/d since early December. On the other hand, refinery run rates in Ecuador continue to remain depressed and thus, the regional outage level for the week ending Jan. 15 will soften only slightly to 1.99 million b/d. Overall, outages are expected to remain largely unchanged for the week ending Jan. 22 at 1.99 million b/d. We still do not have a full progress report on the restart of Limetree Bay's St. Croix refinery, but nevertheless, we believe its operations will be able to help fill some regional supply gaps during the first half of 2021.
Africa: The regional level of downtime is expected to decline to 1.20 million b/d for the week ending Jan. 15 as we expect a small recovery in refinery runs in the region. However, maintenance work at Sudan's Khartoum refinery is still underway. Additionally, South Africa's Cape Town and Durban refineries remain shut and the overall regional downtime is expected to remain at around 1.15 million b/d for the week ending Jan. 22. We confirmed that the Limbe refinery in Cameroon still has not completed its maintenance, and for now we have extended the duration of this maintenance work through the end of January.