Asia gasoline complex poised for demand recovery | Hellenic Shipping News Worldwide

The Asian gasoline complex is set to recover further in 2022 as coronavirus vaccination rates and control measures improve, but the pandemic-related concerns continue to steer the market on an uncertain path. Some respite came in the form of increased mobility in the region as more countries move to learning to live with the virus, with the exception of China’s zero-COVID policy.

Demand recovery on track
“Currently, we expect Asian gasoline demand to grow year on year by 410,000 b/d in 2022, after a sharp contraction of 723,000 b/d in 2020 and an increase of 404,000 b/d anticipated for 2021. In other words, Asian gasoline demand is expected to recover to above 2019’s level by 1.2% in 2022.” JY Lim, oil markets adviser at S&P Global Platts Analytics said.

In Southeast Asia, market sources expect Indonesia’s gasoline demand to remain on the upward trajectory through 2022 as the country’s appetite for the motor fuel continued to improve in the fourth quarter of 2021.

The steady momentum was fueled by optimism in the country’s improving mobility index, as well as the acceleration in its national vaccination drive to fully inoculate the population against COVID-19, sources said.

Ramadan in April was also expected to raise gasoline buying activity in the first quarter of 2022, and sources expect a more robust gasoline demand in the coming months.

Driving activity in Indonesia, Southeast Asia’s largest gasoline buyer, surged to 115.7% above baseline levels on Dec. 31, 2021, up from 49.55% above baseline recorded on Dec. 30, Apple mobility data showed.

Driving activity on Dec. 31, 2021 in Indonesia was at its highest since Apple mobility started tracking data on Jan. 13, 2020.

Meanwhile, the gasoline demand outlook in China firmed as the commerce ministry raised gasoline import quotas to 700,000 mt to Chinese trading firms and refiners in 2022.

China’s state-controlled refiners PetroChina, Sinopec, CNOOC and Sinochem received gasoline import quotas of 100,000 mt, 250,000 mt, 100,000 mt and 250,000 mt, respectively.

“A likely reason behind the decision to raise gasoline import volumes would be following the crackdown on independent refineries, giving additional quotas would be sensible to remedy supply crunches in the future,” said a source with knowledge of the matter.

According to Platts Analytics data, gasoline demand in China is estimated to average 3,665 b/d in the first half of 2022, up from the 3,600 b/d average for all of 2021.

Gasoline production is expected to shrink to 3,591 b/d in the first half of 2022, down 8.14% from the 3,909 b/d average in 2021, the data showed.

In the first half of 2022, India’s gasoline demand is expected to average 812 b/d, up from the 761 b/d average in 2021, Platts Analytics data showed in December 2021.

“The impact of omicron on Asia’s mobility is expected to be moderate as any lockdowns are likely to be localized and more targeted,” said JY Lim.

Vaccination rates in Asia were also markedly improved from 2021 levels. Within a short span, countries such as Singapore and Malaysia had 87% and 78.5%, respectively, of the total population fully vaccinated as of Jan. 3, data from the countries’ health ministries showed.Asia gasoline complex

Mixed supply fundamentals
The gasoline complex might face some headwinds as major refiners have announced plans to keep run rates high as crack spreads remain firm.

At the end of 2021, state-controlled refineries in India were heard to be operating at maximum capacity as the transport sector received a boost on fewer movement restrictions amid improved vaccination.

In Australia, the closures of the Kwinana and Altona refineries, respectively, has left the country with only two operating refineries — Viva Energy’s 128,000 b/d Geelong and Ampol’s 109,000 b/d Lytton refineries — which increases its reliance on refined product imports.

Ampol, formally Caltex Australia, will continue refining operations at its Lytton refinery “subject to the government’s refining support package being successfully legislated as proposed.”

Ampol also said it could convert the refinery to an import terminal “should the package not be successfully legislated or, in future, in the case of persistently low refinery margins or other adverse events.”

In its first batch of 2022 oil product exports comprising gasoline, gasoil and jet fuel, China slashed quotas by 56% on the year, leaving only 13 million mt.

“Cargoes might start to come from India more if China export quotas remain tight,” said a Singapore-based trader.

“The supply outlook from China is expected to remain weak, with the Olympics and Chinese New Year holiday coming up, the country would opt to channel barrels inward,” the trader added.
Source: Platts


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.  Learn more