US Refining – Opportunities in a Challenging Market Environment

摘要

The current global and US market environment for refiners is very challenging, with the industry sufferingrnlow utilisations (due to the economic crisis reducing demand) and margin compression (from the surplusrncapacity and also from weak light/heavy differentials). Our preliminary estimates suggest that one quarterrnof the North American refining industry was cash negative during 2009.rnConventional wisdom would suggest projections of recovering economic growth in 2010 should support anrnimprovement in margins. However, for the US, we expect ethanol to supply the projected recovery andrngrowth in gasoline demand, so there is limited demand for refinery based gasoline. Furthermore, on thernsupply side, significant refining capacity additions have remained under development, a number of whichrnare highly competitive export oriented assets targeting Atlantic Basin markets. Depending upon refineryrnconfiguration, 2010 margins could be weaker than 2009. Longer term, margins are anticipated to recover,rnmaking near term survival imperative.rnThe strategies for survival drive future opportunities, with refiners needing to understand the position ofrntheir assets in the extended value chain against local and international competitors under various marketrnlandscapes, as the future is far from certain with impacts far from uniform across refiners, markets, andrnassets.