Vaccination, oil demand probably lagging Europe, South Korea, China
Malaysia to cap gasoline production below 440,000 t / month in June and July
Slow roll-out of vaccination to continue hurting the tourism sector and capping gasoline demand
Refiners in Southeast Asia are under pressure to reduce their production of petroleum products and also limit imports of middle distillate due to the prospect of reviving demand for lukewarm fuel, advances in vaccination in the region and l economic activity to lag considerably behind other regions.
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The recovery in oil demand in Southeast Asia, especially for transport fuels, is likely to be much slower than in the more economically advanced countries in Asia and elsewhere due to the slow pace of the oil recovery program. vaccination, according to sources from refineries in Indonesia and Thailand, as well as oil industry research analysts at Vietcombank stocks.
With the United States, the United Kingdom and many Western European countries leading the global vaccination campaign, while the vaccination rate in China, South Korea and Singapore is significantly higher than that of the ‘Far East, many countries in Southeast Asia are expected to fall significantly behind due to supply constraints. vaccines and the lack of effective immunization infrastructure and social medical systems, market sources and analysts said.
As a result, major refiners in Southeast Asia are grappling with excess petroleum products, especially after consumer demand for transportation fuel has fallen short of expectations over the past two months.
In Malaysia, gasoline production in April jumped to 474,289 mt, more than double the 223,795 mt in March, as domestic refiners increased production in anticipation of improved demand ahead of the celebration of Ramadan from April 12 to May 12.
However, the country’s gasoline production is expected to have dropped in May and will likely be limited from June due to poor driving activity after increased movement restrictions were imposed in mid-May, according to a source at operation of the Petronas refinery plant in Melaka.
Malaysia’s gasoline production is expected to fall below 440,000 mt in June and July, according to middle distillate traders and Kuala Lumpur and Melaka-based refinery operating sources surveyed by S&P Gjobal Platts.
The country has grappled with a new wave of COVID-19 infections since the third week of May, with the number of new daily infections reaching a record high of 9,020 cases on May 29, according to data from John Hopkins University .
Driving activity in Malaysia due to the restrictions and subsequent lockdown has grown from a peak of over 40% above benchmarks at the end of April to 37% below baseline on June 9, according to Apple mobility data.
Dull tourism, limited fuel imports
Meanwhile, the slow progress of the vaccination program in Thailand, Indonesia and Vietnam is likely to continue to hurt the countries’ tourism sectors, putting continued pressure on transport fuel demand and import volumes as the number of travelers will likely remain significantly lower than before the pandemic. period, refinery sources and market analysts said.
âI don’t see the production and imports of transportation fuels like gasoline and jet fuel improving much from last yearâ¦ these are economies that are heavily dependent on tourism but that’s rather worrying because the ‘Southeast Asia could be one of the last regions to open up to the borders to travel without quarantine given the painfully slow progress in vaccination,’ said a middle distillate business manager at Pertamina, an Indonesian public company.
Malaysia, Vietnam, Indonesia, Thailand and the Philippines had administered fewer than 11 doses of COVID-19 vaccines per 100 people as of June 13, compared to South Korea’s 25, China 55 and Singapore 75, according to the latest data from individual health ministries. Asian country collected by Platts.
Indonesia’s Pertamina will likely import between 8 and 9 million barrels of gasoline in June, unchanged from May, as domestic demand remains uncertain amid rising COVID-19 infections, sources told Platts industry with close knowledge of the company’s import plans. This is the third consecutive month that the company has maintained stable import volumes.
Vietnam saw its gasoline imports drop to a 14-month low of 53,293 mt in May, according to preliminary data from Vietnamese customs. The country is expected to keep its gasoline imports below 130,000 t / month on average in 2021 if restrictions on international travel remain in place for the rest of the year, according to middle distillate distribution and trade sources based in Hanoi and Da Nang interviewed by Platts. In comparison, the country’s gasoline imports averaged 127,800 t / month in 2020 and 166,900 / month in 2019, according to customs data.
Meanwhile, Thailand’s automotive diesel exports in April jumped 41.6% on the month to 128,227 bpd, according to the latest customs service data, with the sharp rise on more domestic demand. low due to imposed movement restrictions related to the coronavirus.
Driving activity has fallen from an annual high of around 30% above benchmarks in mid-April to 40% below benchmarks as of June 14, according to mobility data from Apple .