Released May 14, 2020 | SUGAR LAND
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PETROLEUM REFINING HIGHLIGHTS
IIR sees a huge pivot point in output looming as this week nears an end. Refiners have to decide whether to throttle up or stay in low gear. As some refineries work to return to higher crude run rates, demand analysis and data are being scrutinized by minute by minute.
Many refiners face lines in the sand this week for making decisions and soon will be coming out with their revised game plans. Starting and stopping a refinery is not like flipping a light switch, so you can expect many mechanical issues as units return to full steam. Unplanned outages will be the norm this summer.
Data shows gasoline crack spreads have improved. Diesel was good, but was pushed back as refineries changed flows to produce more distillates, the choice of trucks and delivery transportation vehicles that have showed the lowest drops in demand. But now, with road traffic building again, and storage drawing down, look for refiners to come back out to play, and utilization to improve. The IIR GRR shows us at about 70% utilization, which is up slightly week over week.
PETROCHEMICAL HIGHLIGHTS
The Petrochemical market is in the classic tug-of-war. On one side is the low cost of hydrocarbon feedstock coming from the refiners and natural gas liquids (NGL) market; on the other side is global demand for the end products, which is not pulling quite as hard now. Diversity of outlets is everything for the plastics industry, whose products are in everything. This bodes well for plastic producers, as one industry like automotive might slow, but others like healthcare products are on the rise. Look for a slow, gradual rebound in production. The IIR graph below shows that units offline due to COVID-19 aim to return over the next month or so. The MARCON number (market condition number) for Petrochemical is only a minus 2 or 3 at most on a scale of 1-5.
POWER HIGHLIGHTS
IIR research shows maintenance season in ERCOT is coming to an end. As temperatures rise, the power plants will be firing on all cylinders. COVID-19 did not impact the speed of work being done at the plants this spring, but it did reduce the number of outages that were performed this year so far. Many plant operators opted to push planned work to the fall if they could, in order to not deal with such issues while pulling together work crews and such. Look for many unplanned outages though the summer, and a very crazy fall maintenance season for power plants across the U.S.
ALTERNATIVE FUEL HIGHLIGHTS
Ethanol-based additives might have hit bottom last week, and are slowly coming out of the cellar.
As gasoline sales equates to volume increases, we are seeing plans to restart some plants, but many will not resume production this summer, or even at all. Look for bankruptcies among producers, and a rationalized market going forward. All in all, this cutback, with less refining capacity over the next year or two, point to a spike in gasoline prices sometime in early 2021, from the valley to the mountain top. Don't be surprised as the pendulum swings.
OIL & GAS PRODUCTION HIGHLIGHTS
IIR research shows that liquefied natural gas (LNG) liquefiers are cutting production. The global decrease in demand has hit the shores of the Gulf Coast, albeit with a lag, like a message in a bottle, but it came as it was read. Shipments have been canceled, and trains have gone offline, IIR research shows here. Look for a nice slow but steady climb back up as economies start up, and the cooling season across the globe kicks in. Hot weather in the Northern Hemisphere is the light at the end of the tunnel here.
OIL & GAS PIPELINE HIGHLIGHTS
IIR research shows that the pipeline builders did not get the memo to slam on the brakes. For many operations and projects out there in the field, it's just another day; slow and steady, get the job done.... progress. However, they have slowed a bit, and completion dates kicked out a bit, but it is still all systems are go. Maybe they don't have internet out there, because they have not slowed down much but signaled only a slight tap of the brake lights. IIR shows here what some major projects will be doing by end of the year, with more coming... MARCON is a -1 at most.
TERMINALS HIGHLIGHTS
As reflected in AlphaBBL and IIR data, a pickup in demand resulted in a nice draw on Cushing. But with June WTI incoming, we might not be completely out of the woods. Follow the yellow brick road and hope that when the current goes up that the Wizard of Oz is in a good mood.
FOOD & BEVERAGE HIGHLIGHTS
The food industry has taken quite a hit, but has the resilience of a bullfighter. IIR shows project work has been reduced, but many are still moving forward in meat & poultry, grains, and packaged & processed foods. The interruption to the highly manual processes used by the industry has curtailed production because of the extra steps in the process flow. This has created supply shortages in whole regions of the country, but the industry has been adaptive and innovative. Yes, prices for the consumers will go up, but the industry itself might only see a fraction of that increased income as costs for safety, personal, insurance and best practices are skyrocketing. Somebody has to pay the bill, and it is our backyard BBQ that is pulling out the billfold.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
IIR sees a huge pivot point in output looming as this week nears an end. Refiners have to decide whether to throttle up or stay in low gear. As some refineries work to return to higher crude run rates, demand analysis and data are being scrutinized by minute by minute.
Many refiners face lines in the sand this week for making decisions and soon will be coming out with their revised game plans. Starting and stopping a refinery is not like flipping a light switch, so you can expect many mechanical issues as units return to full steam. Unplanned outages will be the norm this summer.
Data shows gasoline crack spreads have improved. Diesel was good, but was pushed back as refineries changed flows to produce more distillates, the choice of trucks and delivery transportation vehicles that have showed the lowest drops in demand. But now, with road traffic building again, and storage drawing down, look for refiners to come back out to play, and utilization to improve. The IIR GRR shows us at about 70% utilization, which is up slightly week over week.
PETROCHEMICAL HIGHLIGHTS
The Petrochemical market is in the classic tug-of-war. On one side is the low cost of hydrocarbon feedstock coming from the refiners and natural gas liquids (NGL) market; on the other side is global demand for the end products, which is not pulling quite as hard now. Diversity of outlets is everything for the plastics industry, whose products are in everything. This bodes well for plastic producers, as one industry like automotive might slow, but others like healthcare products are on the rise. Look for a slow, gradual rebound in production. The IIR graph below shows that units offline due to COVID-19 aim to return over the next month or so. The MARCON number (market condition number) for Petrochemical is only a minus 2 or 3 at most on a scale of 1-5.
POWER HIGHLIGHTS
IIR research shows maintenance season in ERCOT is coming to an end. As temperatures rise, the power plants will be firing on all cylinders. COVID-19 did not impact the speed of work being done at the plants this spring, but it did reduce the number of outages that were performed this year so far. Many plant operators opted to push planned work to the fall if they could, in order to not deal with such issues while pulling together work crews and such. Look for many unplanned outages though the summer, and a very crazy fall maintenance season for power plants across the U.S.
ALTERNATIVE FUEL HIGHLIGHTS
Ethanol-based additives might have hit bottom last week, and are slowly coming out of the cellar.
As gasoline sales equates to volume increases, we are seeing plans to restart some plants, but many will not resume production this summer, or even at all. Look for bankruptcies among producers, and a rationalized market going forward. All in all, this cutback, with less refining capacity over the next year or two, point to a spike in gasoline prices sometime in early 2021, from the valley to the mountain top. Don't be surprised as the pendulum swings.
OIL & GAS PRODUCTION HIGHLIGHTS
IIR research shows that liquefied natural gas (LNG) liquefiers are cutting production. The global decrease in demand has hit the shores of the Gulf Coast, albeit with a lag, like a message in a bottle, but it came as it was read. Shipments have been canceled, and trains have gone offline, IIR research shows here. Look for a nice slow but steady climb back up as economies start up, and the cooling season across the globe kicks in. Hot weather in the Northern Hemisphere is the light at the end of the tunnel here.
OIL & GAS PIPELINE HIGHLIGHTS
IIR research shows that the pipeline builders did not get the memo to slam on the brakes. For many operations and projects out there in the field, it's just another day; slow and steady, get the job done.... progress. However, they have slowed a bit, and completion dates kicked out a bit, but it is still all systems are go. Maybe they don't have internet out there, because they have not slowed down much but signaled only a slight tap of the brake lights. IIR shows here what some major projects will be doing by end of the year, with more coming... MARCON is a -1 at most.
TERMINALS HIGHLIGHTS
As reflected in AlphaBBL and IIR data, a pickup in demand resulted in a nice draw on Cushing. But with June WTI incoming, we might not be completely out of the woods. Follow the yellow brick road and hope that when the current goes up that the Wizard of Oz is in a good mood.
FOOD & BEVERAGE HIGHLIGHTS
The food industry has taken quite a hit, but has the resilience of a bullfighter. IIR shows project work has been reduced, but many are still moving forward in meat & poultry, grains, and packaged & processed foods. The interruption to the highly manual processes used by the industry has curtailed production because of the extra steps in the process flow. This has created supply shortages in whole regions of the country, but the industry has been adaptive and innovative. Yes, prices for the consumers will go up, but the industry itself might only see a fraction of that increased income as costs for safety, personal, insurance and best practices are skyrocketing. Somebody has to pay the bill, and it is our backyard BBQ that is pulling out the billfold.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
