Analysts at Goldman Sachs Group Inc expected the global refining industry to enter a consolidation phase due to slowing demand growth and the restart of megaprojects next year. Low demand is yet to cause any delays in a number of large-scale refining projects, particularly in China and the Middle East, the bank noted. These new refineries are expected to start up in 2021-2024 and reduce global utilisation rates by 3% from 2019 levels.
The new capacity will heighten competition which will likely result in lower refining margins over 2021-2022 and potential refinery closures in developed countries. A separate industry survey found that around 1.4 million bpd or 9% of Europe’s refining capacity is under threat of rationalisation in 2022-2023. This was before the coronavirus pandemic, which wiped over 20% of global oil demand.
Goldman analysts said gasoline and diesel demand would regain its 2019 levels by 2021, while jet fuel is unlikely to get its pre-pandemic levels until at least 2023. LPG and naphtha consumption will be primary drivers of long-term growth thanks to growing petrochemical demand, while overall oil demand will unlikely reach a peak before 2030, they added.
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Published on July 3, 2020 2:36 PM (GMT+8)Last Updated on July 3, 2020 2:36 PM (GMT+8)
