IIR's May 7 COVID-19 Impact Views

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PETROLEUM REFINING HIGHLIGHTS
Taking a look at IIR Energy's 180-day window shows that China still has some huge units offline, including more than 200,000 barrels per day at Sinopec's Beijing Refinery. Asian transportation demand is edging up, Industrial Info research shows, and China's national and teapot refiners are taking advantage of the low feedstock costs. Look for most refiners that have capacity offline to rush to get back up to speed as the buying signals show up from gas pumps across Asia.



PETROCHEMICAL HIGHLIGHTS
Industrial Info research shows a good number of new-build ethylene steam cracker startups slated for this year that are being pushed back to later in the year, or even into 2021. Projects in the final stages still have the green light and are experiencing little changes to capacity or design, but projects in the early stages are being delayed and experiencing modifications of schedules. The charts below shows the top five cracker projects.



POWER HIGHLIGHTS
Power generation remains one of the sectors least affected by COVID-19. Power providers have been operating a leaner system since the 2008 downturn, so it was not overpriced when the coronavirus shutdown hit. The leaner you are, the less you fall, perhaps. Also, even though power load has been down so far for industrial and commercial spaces, much of that demand can be turned back on with a flip of a switch.

Power demand is 75% or more weather-driven. Summer is coming fast, and reserve margins will be tested this year in some ISO markets like ERCOT, CALISO, SPP and other interconnections. As reliable, affordable and ready renewable power at peak times is not a realty yet, load will fall to fossil fuels during peak demand periods, and record cooling demand is forecast for many parts of the U.S., as recent weather patterns show a continued increase of power-use records seemingly every year.

U.S. power generation is very reliant on natural gas, production of which is decreasing because of a lack of associated gas production from oil wells.

The following graphs show the dominance of natural gas in the U.S. power sector. When it gets hot, natural gas use can increase by up to four times.





ALTERNATIVE FUELS HIGHLIGHTS
The graph below shows what you probably already new about any corn-based or bio-based ethanol new-build project. Why build more capacity to supply fuel to cars that aren't moving? However, as we all know, nothing lasts forever, and biofuels are here to stay. Manufacturers that can produce, and deliver better grades for less will survive and thrive.



OIL & GAS PRODUCTION HIGHLIGHTS
Industrial Info is seeing some direct headwinds in the liquefied natural gas (LNG) build-out market. When taking a deeper dive to the plant level, research shows that France's Total Petroleum Company plans to cancel some U.S. LNG cargoes this summer, given weak prices and demand due to the global economic slowdown. Also, Industrial Info data show that Cheniere, the biggest U.S. LNG exporter, has received additional cancellations beyond the two for April that were previously headlined.

Market participants are said to be looking to import more LNG into the U.S. due to low international versus domestic gas prices and storage. Natural Gas marketers are probably watching for portfolio players trying to move Latin America and/or West Africa volumes into the U.S. Mid-Atlantic and Northeast this spring.



OIL & GAS PIPELINE HIGHLIGHTS
Industrial Info data show that the peak startup time for crude oil pipelines in north America is still there, but has shifted to the future a bit, to the end of 2021, because of COVID-19. Crude by pipe is a must for North American producers and especially those in the Canadian oil sands. Look for a speed-up in the long run, with 2020 representing a tap to the brakes.



TERMINALS HIGHLIGHTS
Our friends at Alpha BBL show a steep decline in storage at Cushing, ground zero for the price of West Texas Intermediate (WTI) crude oil. As we know, when the crude had nowhere to go at May expiration, we saw what no one ever thought could happen--negative pricing. Storage is diving, drivers are out, and the market is trying to rebalance in good fashion for now.





FOOD & BEVERAGE
Industrial Info sees that the cost of your backyard barbeque this summer will be almost doubled. The top five producers of meat and poultry are experiencing COVID-19 outbreaks and are the most impacted by the virus in this manually intensive food process. Look for more news from Tyson, Pilgrims and Sanderson Farms, as their supply chain still has a long way to go.



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 https://www.industrialinfo.com.