More than a quarter of Europe’s ethylene capacity under threat

Article by Adam Duckett

AROUND 6.6m t/y – or 26% – of Europe’s ethylene production capacity is threatened by reduced activity at refineries due to the spread of coronavirus, analysts report.

The pandemic has severely curtailed travel, leading to a loss in demand for fuel. As a result, refineries will reduce rates or cease production and this in turn will reduce feedstocks used by crackers to produce ethylene, says the Independent Commodity Intelligence Services (ICIS).

Reduced refining rates threaten 6.6m t/y of ethylene capacity; 5.9m t/y of propylene capacity; and 4m t/y of benzene capacity.

ICIS says that around 6.5m bbl/d of European oil refining capacity is not operating at typical capacity, projecting that throughput has been reduced by about 2.2m bbl/d from a total of 12.2m bbl/d.

“The reduction is almost certainly even higher in reality and could be as high as 5m bbl/day when considering those sites which do not share such information,” said Michael Connolly, Senior Consultant at ICIS global refining team.

While refineries are operating in the range if 50­–60% utilisation, which reflects the typical minimum downturn for most distillation units, the crackers that are directly linked are probably able to run at higher rates.

Connolly said that while the supply of normal feedstock of light naphtha will fall with refinery utilisation, the mid-portion of naphtha that is generally used in the gasoline pool via further processing can be directed to steam cracking instead.

“This would assist in decoupling refinery-cracker utilisation rates, to enable the better margins on naphtha cracking to be captured and meet supply demand for the types of polymers that are essential for the fight against coronavirus," added Connolly. He warned, however, that if refineries are forced to shut down completely, many associated crackers are unlikely to have the necessary logistics in place to import feedstock and maintain operations.

Article by Adam Duckett

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