Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil | Petrochemicals

Med refineries unlikely to hike runs as bad margins offset rising road fuel demand

Energy | Oil | Crude Oil | Gasoline | Coronavirus

Signs of China's oil demand recovery emerge


Platts Market Data – Oil

Oil | Refined Products | Fuel Oil | Shipping | Dry Freight | Marine Fuels | Tankers

Mediterranean Bunker Fuel Conference, 9th Annual

Natural Gas | Oil | Petrochemicals | Aromatics | Polymers

FACTBOX: Petrochemical markets see some support as shutdowns ease

Med refineries unlikely to hike runs as bad margins offset rising road fuel demand

London — Mediterranean refineries are unlikely to ramp up their run rates in the short term as refinery margins remain poor despite an uptick in demand for diesel and gasoline in Europe as countries ease restrictions introduced to combat the COVID-19 spread, according to traders.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"There is no way they will increase because the margins are horrible," a trader focused on the Mediterranean middle distillates market said Thursday.

Refineries across the Mediterranean reduced their throughput or closed in the wake of demand destruction caused by the coronavirus pandemic and subsequent lockdowns.

Apart from Italy's API refinery, which has now restarted after closing due to weak demand shortly after coming out of maintenance, many Italian refineries continue to operate below capacity.

Eni's refineries in Italy -- Livorno, Sannazzaro and Taranto -- have been running at around 60% of capacity. Milazzo, located on the southern Italian island of Sicily, reduced overall output to some 60% of total capacity and took its FCC offline and reduced output at its gasoline production units to offset the drop in demand. Saras, which owns Italy's Sarroch refinery in Sardinia, said that the refinery has been running at around 70% of its capacity since March. Only two of its three crude distillation units are currently operational.

As a result of low run rates but also increase demand there has been tightness in the ultra-low sulfur diesel market in the Mediterranean. "There is less production and a bit of diesel demand coming back," a second trader said.

As countries are gradually easing their strict lockdowns, road fuel demand is rising.

ExxonMobil said that its two French refineries, Gravenchon and Fos, were adapting activities to the evolution of the market, declining to give further details. Oil product demand in France has started to increase as the country is easing restrictions introduced to combat the coronavirus spread. ExxonMobil said at the end of March that throughput at the two refineries had been reduced because of decreasing demand.

However, a rapid increase in refineries' production rates seems unlikely. "Refinery margins are still a disaster, losing $3/b after costs, there is also no ullage for extra material," the second trader said.

In Spain, refinery operators have trimmed rates to meet demand. Workers are only now returning to A Coruna refinery in northwest Spain after the complex had been kept largely offline since a routine January halt. One of the two crude units at San Roque in southern Spain is halted and the refinery's output has been adjusted to account for lower demand levels.

Meanwhile, Galp has temporarily suspended fuel production at the Matosinhos refinery in Portugal from mid-April and at its larger Sines refinery for around a month from May 4.

In France, Total's Feyzin has not restarted yet after maintenance. Total said that currently its refineries in Europe are running at around 60%.

According to a third trader, the diesel and gasoline demand destruction has been real, therefore the run cuts were necessary and one cannot be sure how the virus will evolve.

"There is a huge amount of floating storage everywhere," he said, adding that refineries were likely to look first at reducing their inventory before ramping up running rates.

But with rising demand some refineries are already increasing their throughput. Israel's Bazan, which operates the Haifa refinery, said that as of early May "most of the severe traffic restrictions have been removed in Israel and according to the Ministry of Energy, the consumption of diesel and gasoline is returning to the pre-restrictions level." In April, Bazan said that due to declining domestic demand following restrictions to combat the coronavirus spread it had managed to "divert some of the diesel quantities from the domestic market to the export markets" and had made adjustments to production volumes.

Meanwhile, traders suggested that Tupras' Izmir refinery, which halted in early May and is due to restart in July, might come back sooner as demand is rising.

Turkish demand for diesel fell by 27% over the first 16 days of May, but the fall is lower than the 37% year-on-year fall reported over the first 10 days of the month, suggesting that demand is slowly returning to normal levels as Turkey begins to loosen the severe lockdown the country has been under since March.