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Refined product data paints grim picture for tanker market

Overall demand for transport, heating and industrial fuels plunged 20% in the first half of 2020 compared with the same period in 2019

The largest global demand slump was predictably for jet fuel, with demand 39% lower, compared with gasoline which was down 20%. Diesel and gasoil registered the smallest fall at 15.9%

THE release of global data for demand, production and export of refined products shows how the coronavirus pandemic has reshaped tanker markets for vessels shipping gasoline, jet fuel, gasoil and diesel.

New Joint Organisation Data Initiative figures show overall demand for transport, heating and industrial fuels plunged 20% in the first half of 2020 compared with the same period in 2019, to 41.7m barrels per day.

 

Low export volumes

The largest global demand slump was predictably for jet fuel, with demand 39% lower, compared with gasoline which was down 20%. Diesel and gasoil registered the smallest fall, at 15.9%, reflecting its broader industrial use beyond cars and trucks.

Half-year exports of gasoil and diesel also showed the smallest fall compared with the same period in 2019.

Exports were down 10%, to just under 7.4m bpd, Jodi data showed. Gasoline exports fell 20% and jet fuel by 52%.

Large reductions in middle distillates, which incorporate diesel, gasoil and jet fuel were noted from Saudi Arabia, the second-biggest exporter after the US. Shipments of gasoil and diesel from the kingdom fell by 33.7% over the six-month period.

However, the fall is partly explained by low export volumes in February and March, when the kingdom pumped record volumes of crude for export. Diesel and gasoil exports in June were reported at 553,000 bpd, which compares to 700,000 bpd for the same month in 2019.

Counterintuitively, Saudi diesel and gasoil exports in May reached the most since January 2019, at 754,000 bpd according to the Jodi data. That was when the country’s crude production and exports slumped to the lowest in more than a decade as part of an agreement of Organisation of the Petroleum Exporting Countries and allies to curb oil output to restore falling prices.

The kingdom likely diverted crude to its middle distillate-producing refineries, which is also borne out in its output figures, which were the highest in 18 months in May and June.

The US, which is a key exporter of refined products to Europe, Latin America and also West Africa reported figures that revealed half-year exports of diesel and gasoil were down by 8.1% year on year.

China figures showed a 5.6% drop in shipments. While small, June figures were the lowest monthly export volume since 2013. Russia, the largest exporter of diesel for northwest Europe reported a fall in export volumes of 13.8%.

 

Europe most impacted

Gasoline demand fared best in countries where lockdown measures were least restrictive, which meant that countries in Europe, with refineries that already produce more of the transport fuel than they need, were the most affected.

France half-year demand figures for gasoline plunged 39% over January–June, with Spain slumping by 31%, and the UK by 26%. US demand was down overall by 15%, smaller than China’s 18% fall.

Brazil, where the government has resisted lockdown policies, saw demand 6% lower.

Gasoline demand has quickly risen month on month in both China and the US.

The US figures for June, at 8.3m bpd, compared with 7.2m bpd for May, and 5.6m bpd for April. Chinese demand for gasoline is reported in June at 2.7m bpd, the highest since January.

That is probably why global gasoline export figures show the smallest, 15% fall over the half-year period. China, which imported record volumes of cheap crude during June and July and record refinery output actually saw gasoline volumes rise by 16% in 2020’s first six months.

Chinese exports of gasoline were reported to Jodi at 369,000 bpd for the first six months of 2020, compared with 318,000 bpd for the same period a year earlier.

Exports from the Netherlands, from where several major refineries supply the US east coast and West Africa, dipped 20% over the half-year period, to 479,000 bpd. Exports from the US, which are mainly shipped from the US Gulf coast, were also down 20%, to 724,000 bpd.

 

Jet fuel output a third lower

The most striking statistics were seen for jet fuel. Globally, refinery output was cut by a third, demand plunged by 39%, and exports were 52% lower. 

The demand collapse was strongest in Europe where refineries in the Mediterranean and north west Europe saw half-year numbers that were as much as 70% below the same period of 2020. US imports were 66% down.

Demand has yet to rebound, with Saudi Arabia, a key supplier to northwest Europe and the Mediterranean seeing June figures hit the lowest since November 2015. China’s May figure was the lowest export volumes for jet fuel since September 2012, data shows.

If there are any bright spots, it is for diesel demand and exports, where June figures in some of the key production and exporting countries are showing a rebound from moribund numbers seen from April and May. US exports returned to 1.23m bpd in June.

 

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