Quarterly Update on Global Raffinate Market
For the Quarter Ending June 2021
During the second quarter of 2021, Raffinate supplies in the North American region surged owing to the ample availability of the upstream Naphtha. The industrial infrastructure in the US Gulf Coast recovered from the impact of February winter storm pushing up the operational rates at the Naphtha crackers. However, few crackers struggled to achieve the optimum efficiency and operated at lower rates. Even though the production of automobiles reduced amid the global shortage of semiconductors the offtakes were surged from the downstream refiners throughout the second quarter. Enquiries of C-4 Raffinate from the Butadiene producers bolstered throughout the North American region. Raffinate prices in the region remained firm in the second quarter due to firming upstream crude oil.
Raffinate supplies in the Asia Pacific region were tight in the second quarter of 2021, owing to the turnarounds at some facilities based in South Korea. Several crackers in China ended their maintenance turnaround and sentiments rose after the news that Philippines JG summit will start its new 110 KTPA Raffinate facility in July after observing COVID related delays. Sinopec announced start up of its two new STRATCO alkylation units in China which would process MTBE raffinate as feedstock to generate low-sulfur and high-octane alkylate with zero olefins. The move will enable Sinopec to meet the criteria of China’s VI standard at two refineries. Demand from the downstream industries was high to cope with the enquiries in the Butadiene industries, whereas in India, the market outlook remained healthy despite the COVID related restrictions. Pricing trend in India observed an uptrend throughout Q2 with the prices of Raffinate-1 assessed at USD 821 per tonne in June.
In the European region, Raffinate supplies were eased with the influx of the American cargoes during the second quarter of 2021. The Raffinate market supplies were further supported as several major producers in the Middle East resumed production after a turnaround. Market participants saw potential strength in the downstream markets with the pickup in industrial activities. The demand bolstered throughout the quarter due to frequent enquiries from the downstream processors and traders actively stocked up inventories to reserve margins.
For the Quarter Ending March 2021
During the first quarter of 2021, Raffinate supplies were sluggish due to slow output in the US, on account of unprecedented extreme weather condition in the US gulf region, which resulted in several petrochemical plant outages. The supply tightness translated sharp increases in the prices of Raffinate. However, production is anticipated to remain tight as the spot offtakes from the buyers inclined due to low inventory levels, and companies focusing on reducing the debt, followed by surged demand from the downstream sectors towards the end of the quarter.
Raffinate supplies improved during the Q1 2021, due to improved production levels, owing to the addition of new capacities in China, followed by several players such as LG Chem and YNCC restarting their productions after a turnaround period. JG Summit in Philippines delayed the commissioning of 110,000 ton/year Raffinate-1 unit until April. Pakistan's Byco Petroleum revealed it plans to construct 27,300 b/d aromatics plant to produce benzene, mixed xylene, p-xylene, o-xylene, C9 and raffinate. Due to firming upstream rates, the prices of C4 Raffinate-2 in India surged by +USD 66.61/ton registering quarterly average of USD 688/ton in Q1.
The supplies were tight in the European region during Q1-2021, as imports from the US declined amid the unprecedented freeze weather, followed by the surged crude oil prices which proportionally hiked the prices of raffinate in European domestic market. Whereas the demand remained slowed from the downstream sector as the offtakes dwindled from the downstream Methyl Tert-Butyl Ether and Butadiene Industries as economies entered fresh lockdown restrictions due to resurgence in COVID cases.
For the Quarter Ending December 2020
Raffinate demand surged across Asia amid ramp up of the market activities which bolstered the demand for downstream derivatives such as MTBE, MEK etc. followed by the refineries in the region operating at their maximum efficiencies. JG Summit Petrochemicals in Philippines announced the start-up of new aromatics and butadiene extraction unit in the upcoming quarter, with the production capacity of 110,000 tonnes/year of Raffinate-1. High demand and hampered imports due to port related congestion pushed the prices of Raffinate-1 and 2 in regional market. In December, price of C4 Raffinate-1 was assessed at USD 462/ton while for Raffinate-2 was assessed at USD 640/tonne in India.
The supplies remained tight during the first half of fourth quarter 2020 as a ripple affect of the aftermath of five hurricanes experienced in the previous quarter. Curtailed crude throughput capped Raffinate supplies in the US gulf region resulting in potential shortage of Raffinate and its other derivatives. However, during the second half of the final quarter, situation improved as the several plants restarted the production to meet the increasing demand. Improved demand followed by the limited production caused the surge in the price in the regional market.
Raffinate demand was reduced amid the resurgence of fresh wave of COVID-19 infections, resulting in reduced consumption for downstream MTBE production during the winter season. The demand of Raffinate, somehow remained balanced, due to increased consumption and high offered prices from the Asian and North American regions. Shortage in overseas containers and high ocean freight resulted in multi-fold increment in the prices of Raffinate. Despite waning MTBE demand, producers remained hopeful amid economic revival post the roll out of COVID-19 vaccine in Q1 2021.