London — Global refinery throughput is expected to rebound by 4.5 million b/d in 2021 after a 7.2 million b/d drop in 2020, the International Energy Agency said Jan. 19.
IEA projects 78.9 million b/d throughput this year, versus 76.9 million b/d in 2020, when refinery rates were impacted by COVID-19.
Refinery runs rose 2.6 million b/d in November 2020 to 76.1 million b/d, "the largest monthly gain in seven years," according to the IEA, which attributed the increase to refineries returning "from peak maintenance."
The expected increase of run rates in 2021 will be lower than the 5.5 million b/d demand growth. However, the refined products stock overhang from last year, when demand dropped by 8.8 million b/d, may be carried this year due to the "relatively high proportion of LPG/ethane" in the demand growth.
The 2020 imbalance between the reduction of throughput and demand has resulted in "a large build in total product stocks."
The product stocks overhang, which was mostly an aftermath of refiners overproducing in April-May because of the "rapid fall of crude prices," is likely to act "as a constant brake on the recovery in refinery margins."
If crude markets tighten faster than products markets, refinery margins may fall in 2021 on average, the IEA said.
In December 2020, the picture was mixed as gains in crude prices were somewhat offset by "extreme winter weather in Europe and Asia," which supported heating fuel cracks.
Cold weather in Asia boosted demand for heating kerosene, which lent support to middle distillate cracks "across all regions."
However, the steeper crude prices and higher refinery runs drove fuel oil cracks lower.
US throughputs increased in December and early January but "are likely to stagnate until a stronger demand recovery takes hold" in the second quarter. For 2020, runs fell 2.3 million b/d, at par with the demand drop.
Last year had an "uneven impact" on European refineries, the IEA said, adding that only in Germany and the Netherlands throughputs were back in their seasonal range by the fourth quarter, "but remained significantly below the seasonal levels elsewhere."
The lowest capacity utilization was recorded in France, where it fell to 55% in 2020. Italy and Portugal also recorded utilization below 70%-64% and 66%, respectively.
With new COVID-19 restrictions taking place, first quarter runs are forecast to fall 1.1 million b/d in Europe.
In Japan, refinery runs started increasing in November and were up in December on seasonally stronger winter demand, but activity in South Korea "stagnated" in November when steam cracker maintenance affected demand for naphtha and refinery margins.
Runs increased in China by 400,000 b/d in 2020, "the lowest annual gain in four years, but an impressive result compared to declines elsewhere."
India's state-owned refineries that serve the domestic market were back to their year-earlier utilization whereas the export-oriented ones retained lower rates.
Runs in Saudi Arabia averaged 68% in 2020 but are expected to increase to 77% in 2021.
Russia's throughput was 320,000 b/d down in 2020, outpacing the 150,000 b/d demand decline.