The world's new refining capacity has reached 40 years, the most profit margin is inevitable
The International Energy Agency (IEA) said in its recent monthly report that 2019 will be the year in which the world's new refining capacity will be put into production the most since the 1970s, with an added capacity of 130 million tons per year. IEA expects global refining capacity to increase by 2.6 million barrels this year, while global demand for refined oil will increase by about 1.1 million barrels. Demand growth only uses half of the new capacity to be put into production. If the adjusted crude oil price can support the refining profit, the capacity utilization rate will not decrease and the product inventory will increase.
According to the IEA, the daily processing volume of crude oil in global refineries will reach 83.4 million barrels this year, up from 82.2 million barrels last year. If average crude oil prices rise for the third consecutive year, refining margins may fall to levels that are forcing some refineries to slow.
In recent years, driven by the rapid expansion of refining capacity in Asia, global refining capacity has grown rapidly, and the growth rate will further increase in the next three years. It is estimated that by the end of 2019~2021, global refining capacity will increase by 4.8 million barrels per day, an average annual increase of 1.6%. China and the Middle East are the main forces driving the growth of refining capacity, the next three years
China's refining capacity will increase by 1.54 million barrels per day, and the Middle East will add 1.47 million barrels per day of refining capacity. This means that China's crude oil imports will grow at an average annual rate of 7% in the next two years, and the refined oil exports in the Middle East will increase by 14%.
According to the statistics of various institutions, the global refining capacity in 2010 was 4.95 billion tons, a net increase of 45 million tons compared with 2017. The newly added capacity is mainly to rebuild, expand and refine the refinery to meet the demand for oil product growth or oil quality upgrade. New device. Most of the new refining capacity in 2018 is located in the Asia-Pacific region. The large-scale projects completed and put into operation include the 20 million tons/year refining project of China Hengli Petrochemical and the Yishan Refining and Chemical Project of 10 million tons/year in Vietnam.
According to the statistics of the new project database of the US Hydrocarbon Processing magazine, there are more than 400 new refinery projects announced worldwide. Among them, Asia Pacific accounts for about 30%, the Middle East accounts for about 23%, Europe and the Commonwealth (CIS) account for about 15%, Latin America for about 12%, the United States for about 10%, Africa for about 7%, and Canada for about 3%.
On January 9, Iran’s National Petroleum Corporation’s Persian Gulf Star Phase 3 6 million tons/year condensate processing project was completed and put into operation; on January 21, Malaysia’s National Petroleum Corporation’s 15 million tons/year side Garland Refinery The integrated project crude oil distillation unit was successfully ignited. China's Zhongke refining and chemical new capacity of 10 million tons / year, Zhejiang Petrochemical 20 million tons / year refinery project, Shandong local refinery in the Shenchi chemical new capacity of 5 million tons / year, Xin Yue burning and Xintai Petrochemical The newly added 3.5 million tons/year will be put into production this year. The two world refining growth centers in Asia Pacific and the Middle East are driving the rapid growth of global refining capacity.
With the successive commissioning of domestic local refineries and private large-scale refining and chemical projects, China's crude oil processing capacity will increase by 32 million tons per year in 2019, and the total refining capacity of the country will reach 863 million tons per year. The excess capacity will rise to about 120 million tons / year. In 2018, China's refining capacity was 830 million tons, a net increase of 22.25 million tons from the previous year, and the refining capacity surplus was about 90 million tons per year. This year, private enterprises' refining capacity is expected to increase to 235 million tons, and the proportion of national refining capacity has increased from 25.6% last year to 27.2%.
The increase in overcapacity means that the refining margin will inevitably fall. In fact, under the situation that the downward pressure on the world economy has increased and the growth of oil demand has slowed down, the global refining rate and profit rate have declined since last year and will continue to decline this year. According to IEA statistics, the average operating rate of refineries in the world is about 83% in 2018, the operating rate of refineries in the US is about 90%, the operating rate of refineries in the Asia-Pacific region is about 85%, and the operating rate of refineries in the EU is about 88%. Last year, the gross profit of the world's three major refining centers declined generally. Refining gross profit of the world's largest refining center in the Gulf of Mexico decreased to US$8.12/barrel, down 14%; Western European refinery profit was US$4.45/barrel, down 24%; Asia-Pacific refinery due to oversupply in the oil market Gross profit fell to $5.05/barrel, down 13%.
According to the analysis report of Deutsche Bank, in 2019, due to intensified market competition and weak demand growth in China's refining industry, private refineries will continue to seize market share from state-owned refiners. In 2019, domestic refining gross margin will drop from US$10 to US$8.4 per barrel. It will not rise back to $9.4 until the implementation of the new International Maritime Organization (IMO) emission standards by 2020.
Of course, the current favorable environment for international oil prices at a low to medium level will enable the refining industry to maintain a high level of profitability. However, in the medium and long term, due to the overcapacity of global refining capacity, the peak demand for oil products is coming, the growth rate of oil demand will continue to slow down, and the gross profit of refining will further decline.