Despite crude oil production cuts, Saudi Arabian crude oil exports to some Asian countries have increased
The U.S. Energy Information Administration (EIA) estimates that during May 2019, Saudi Arabia’s crude oil production approached a four-year low, averaging an estimated 9.9 million barrels per day (b/d). Production declined more than 1 million b/d since its estimated all-time high production levels in October and November 2018 (Figure 1). Although the country’s total crude oil exports are also lower than recent highs, its crude oil exports to some Asia Pacific countries actually increased during the period of declining production. China in particular has increased its crude oil imports from Saudi Arabia, which is partially a result of new Chinese refining capacity. In contrast, U.S. crude oil imports from Saudi Arabia reached a 31-year low in February, with weekly estimates for April, May, and June suggesting even further declines.
Four Asia Pacific countries that publish crude oil imports by country of origin—China, Japan, South Korea, and Taiwan—collectively imported an average of 3.5 million b/d of crude oil from Saudi Arabia in 2018 (Figure 2). Chinese and Japanese 2019 year-to-date crude oil imports from Saudi Arabia are higher than their 2018 annual averages, whereas Taiwan’s are flat and South Korea’s have declined slightly. China’s crude oil imports from Saudi Arabia, in particular, have increased by 0.4 million b/d year-to-date through April compared with the 2018 annual average, significantly higher than Japan’s increase of less than 0.1 million b/d.
In contrast, U.S. crude oil imports from Saudi Arabia have declined year-to-date through March 2019 compared with the 2018 average by more than 0.2 million b/d, averaging 0.6 million b/d for the first quarter of 2019. Weekly estimates through June 14 of this year show continued declines, indicating that imports from Saudi Arabia averaged less than 0.5 million b/d in May and the first half of June. As a result of these shifts in crude oil flows, the U.S. share of total Saudi Arabian crude oil exports fell to 9% in March, and China’s share increased to 24% (Figure 3). Collectively, the United States, China, Japan, Taiwan, and South Korea historically accounted for about 60%–65% of total Saudi Arabian crude oil exports.
These recent changes in crude oil trade patterns are partially because of long-term structural trends within China and the United States, but they are also a result of recent oil market dynamics. From 2010 through 2018, EIA estimates total Chinese petroleum consumption has increased from 9.3 million b/d to 13.9 million b/d, whereas Chinese domestic production has increased from 4.6 million b/d to 4.8 million b/d. As a result, China’s need to meet incremental oil consumption has come primarily from imports. China’s crude oil imports from Saudi Arabia have gradually increased in recent years, and in March 2019 reached the highest level for any month since at least 2004, at 1.7 million b/d. Other countries, including Russia and Brazil, have had larger increases in crude oil export growth to China, however, with Russia overtaking Saudi Arabia as the largest source of crude oil on an annual average basis in 2016.
U.S. crude oil imports, on the other hand, have steadily decreased during this period as domestic crude oil production has increased. In addition, U.S. crude oil imports from members of the Organization of the Petroleum Exporting Countries (OPEC) have declined, in particular, following increases from other countries such as Canada. Canadian crude oil can substitute for certain OPEC grades and have lower transportation costs when shipped by available pipeline capacity.
Saudi Arabian crude oil exports to China increased recently at least in part as a result of the startup of a new 0.4 million b/d refinery in Dalian, Liaoning Province, which has a supply agreement with Saudi Aramco, Saudi Arabia’s national oil company. Saudi Aramco also has a supply agreement with another 0.4 million b/d refining and petrochemical complex in Zhejiang Province, which started trial operations this year.
Other near-term developments, however, could reduce the volume of Saudi Arabian crude oil headed to China for May, June, and through the summer. Saudi Arabia typically increases domestic crude oil consumption in the summer months because the country directly burns the fuel for power generation. Although Saudi Arabia has gradually been increasing the use of fuel oil and natural gas instead of crude oil for power generation, the seasonal increase is dependent on the weather and can still amount to several hundred thousand barrels per day in additional domestic consumption during summer months. The five-year (2014–18) average crude oil burn for electric power generation peaks in July at 0.7 million b/d, an increase of 0.3 million b/d from the April average. In addition, Chinese crude oil refinery demand could be lower in the second quarter of 2019 than in the first quarter of 2019. Bloomberg data suggest that Chinese refinery outages in May and June month-to-date were 2.1 million b/d and 1.7 million b/d, respectively, 0.5 million b/d and 0.6 million b/d higher than their respective five-year averages for those months.
Recent global oil supply issues could keep Saudi Arabian crude oil exports to China, Japan, South Korea, and Taiwan relatively high in the coming months, however, in spite of the previously mentioned seasonal factors. These four countries were all initially granted Iranian sanctions waivers through May 2019. However, because waivers were not renewed, each country will likely need an alternative to Iranian crude oil. This development could keep their crude oil imports from Saudi Arabia near first-quarter 2019 levels for the coming months as a partial substitute for Iranian barrels. Saudi Arabia’s support of maintaining current OPEC production cuts or increasing output levels in the upcoming late-June or early-July OPEC meeting will be a critical determinant for future export flows.
U.S. average regular gasoline and diesel prices fall
The U.S. average regular gasoline retail price fell more than 6 cents from the previous week to $2.67 per gallon on June 17, 21 cents lower than the same time last year. The Midwest price fell nearly 8 cents to $2.54 per gallon, the West Coast price fell nearly 7 cents to $3.45 per gallon, the East Coast price fell more than 6 cents to $2.56 per gallon, the Rocky Mountain price fell nearly 4 cents to $2.91 per gallon, and the Gulf Coast price fell nearly 3 cents to $2.34 per gallon.
The U.S. average diesel fuel price fell nearly 4 cents to $3.07 per gallon on June 17, more than 17 cents lower than a year ago. The West Coast and Midwest prices each fell nearly 5 cents to $3.67 per gallon and $2.96 per gallon, respectively, the Rocky Mountain price fell more than 4 cents to $3.07 per gallon, the East Coast price fell nearly 3 cents to $3.10 per gallon, and the Gulf Coast price fell more than 2 cents to $2.82 per gallon.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 3.3 million barrels last week to 74.5 million barrels as of June 14, 2019, 10.7 million barrels (16.8%) greater than the five-year (2014-2018) average inventory levels for this same time of year. East Coast, Midwest, and Gulf Coast inventories each increased by 1.1 million barrels. Rocky Mountain/West Coast inventories fell slightly, remaining virtually unchanged. Propylene non-fuel-use inventories represented 6.6% of total propane/propylene inventories.
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Headline crude prices for the week beginning 2 December 2019 – Brent: US$61/b; WTI: US$55/b
Headlines of the week
The Global Small-Scale LNG Market is projected to grow from 30.8 MTPA in 2016 to 48.3 MTPA by 2022, at a CAGR of 6.7% between 2017 and 2022. The small-scale LNG market across the globe is driven by their increasing LNG demand from remote locations by applications, such as industrial & power, and the ability to transport LNG over long distances without the need for heavy investment such as pipelines. By terminal type, regasification terminal is expected to grow at a highest CAGR between 2017 and 2022. The increasing demand for LNG from the remote locations and global commoditization of LNG are some of the major factors that are driving the demand for small-scale LNG in this segment.
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The Linde Group (Germany), Wärtsilä (Finland), Honeywell International Inc. (U.S.), General Electric (U.S.), and Engie (France), among others are the leading companies operating in the small-scale LNG market. These companies are expected to account for significant shares of the small-scale LNG market in the near future.
Critical questions the report answers:
Growth Drivers are :
Energy cost advantage of LNG over alternate energy sources for end-users
Heavy duty transport companies save approximately 30% on fuel costs on LNG-fueled trucks, compared to diesel fueled trucks, and produce 30% lower emissions. Air pollution from diesel engines is one of the biggest concerns, especially in areas that struggle to meet air-quality standards. On the other hand, natural gas causes complete combustion and fewer emissions than diesel. It is estimated that increasing environmental concerns from the utilization of diesel vehicles is likely to increase the adoption of green fuel technologies such as natural gas. In the case of electric power generation, natural gas engines below 150 KW are more cost effective than oil fueled engines. Fuel cost is one of the major cost for road transportation, which is strongly subject to excise taxation. Typically, an LNG-fueled Volvo FM truck can travel up to 600 km with LNG. With an additional 150 litres of diesel, it can travel up to 1,000 km without refuelling. Thus, reducing the cost of travel. With additional LNG liquefaction capacity expected to come online in the next few years, an oversupply of LNG is expected, which will drive the price of LNG further lower. Considering all these factors, both developed and developing countries are undertaking feasibility studies to recognize the techno-economics of shifting their economies from diesel to natural gas. Therefore, the cheap price of small-scla LNG over others alterantive fuels will drive the growth during the forecast period.
Small-scale LNG terminals are regarded as facilities, including liquefaction and regasification terminals, with a capacity of less than 1 million tons per annum (MTPA) within the scope of this study. It includes the LNG produced from small-scale liquefaction terminals and regasified at small-scale regasification terminals for catering to applications such as LNG-fueled heavy-duty transport, LNG-fueled ships, and industrial & power generation.
North America small-scale LNG market is projected to grow at the highest CAGR during the forecast period.
The North America small-scale LNG market is projected to grow at the highest CAGR during the forecast period. In North America, most of the small-scale LNG demand in industrial & power applications is met through peak shaving facilities. The peak shaving facilities are used to meet adequate supply of LNG to address the peak demand. In 2015, there were more than 100 peak shaving facilities in the U.S., among which one-half of the peak shaving facilities were located in the Northeast, while a quarter of them were located in the Midwest. Currently, the U.S. has among the highest number of peak shaving plants. However, less than 10% of them are available for any other use due to the current electricity demand. The commissioning of small-scale liquefaction plants can expand the peak shaving capacities in the region.
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Major Market Developments:
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The report "Cryogenic Tanks Market by Raw Material (Steel, Nickel Alloy), Cryogenic Liquid (Liquid Nitrogen, LNG), Application (Storage, Transportation), End-use Industry (Metal Processing, Energy Generation, Electronics), and Region - Global Forecast to 2024" The global cryogenic tanks market size is projected to grow from USD 6.2 billion in 2019 and expected to reach USD 8.1 billion by 2024, at a CAGR of 5.5%.
Browse 121 market data Tables and 36 Figures spread through 147 Pages and in-depth TOC on "Cryogenic Tanks Market by Raw Material (Steel, Nickel Alloy), Cryogenic Liquid (Liquid Nitrogen, LNG), Application (Storage, Transportation), End-use Industry (Metal Processing, Energy Generation, Electronics), and Region - Global Forecast to 2024"
View detailed Table of Content here - https://www.marketsandmarkets.com/Market-Reports/cryogenic-tanks-market-26811967.html
The global industry for cryogenic tanks is driven primarily by the increasing demand for LNG. An increase in infrastructure spending, space applications for cryogenic technologies, and cryogenic energy storage systems represent promising growth opportunities for the market. Improving healthcare services in the developing economies is boosting the cryogenic tanks market.
The steel segment is estimated to lead the cryogenic tanks market, by raw material, during the forecast period.
Steel is primarily used in the manufacturing of cryogenic tanks. Most of the materials are ductile at room temperature and abruptly lose their ductility when a given threshold is exceeded. They then become brittle even at relatively low temperatures. The austenitic stainless steel is majorly used for working in the low-temperature range. Carbon and alloy grade steels used for low-temperature service are required to provide high strength, ductility, and toughness in vehicles, vessels, and structures that must be used at –49°F and lower. These factors are contributing to the growth in demand for steel for the manufacturing of cryogenic tanks.
Liquid Nitrogen is the fastest-growing cryogenic liquid segment of the cryogenic tanks market.
Liquid nitrogen is primarily used in metal processing, food & beverage, electronics, and healthcare industries. The steel manufacturing industry is one of the major consumers of nitrogen. Nitrogen is used in the food & beverage industry for food preservation and packaging applications. The use of liquid nitrogen in this industry enables cost savings during storage and transportation and improves food quality. Liquid nitrogen is used to cool normally soft or heat-sensitive materials, such as plastics, tires, and certain metals. The increasing demand for liquid nitrogen from metal processing, food, and medical industries is expected to drive the market in this segment.
Metal processing is expected to lead the end-use industry segment for cryogenic tanks market during the forecast period.
Metal-processing industry was the largest end-use industry for the cryogenic tanks industry. Cryogenic tanks are increasingly being used in the metal processing industry, especially steel the industry. Huge quantities of nitrogen and other industrial gases are used during the steel manufacturing process. Nitrogen is also known to be largest consumed gas in the industry. It is used as a high-pressure gas for laser cutting of steel and metal. The inert properties of nitrogen facilitates its use as a blanketing gas. Some gases, including hydrogen and oxygen, are also used in the metal processing industry. Cryogenic tanks are commonly used in the storage and transportation of these gases in manufacturing plants, which drives the market demand.
High economic growth rate and growing metal processing and energy generation industries in China, Australia, and India are projected to lead the cryogenic tanks market in APAC during the forecast period.
APAC is the fastest-growing market, in terms of both production and demand. Higher domestic demand, easy availability of raw materials, and low-cost labor make APAC the most preferred destination for the manufacturers of cryogenic tanks. The cryogenic tanks market in India, China, and Australia is expected to witness significant growth during the forecast period. The market is primarily driven by the demand from the energy & power sector. APAC is emerging as a leading consumer of cryogenic tanks, owing to the increasing demand from domestic as well as international markets.
The key players in cryogenic tanks market are Chart Industries (US), Cryofab (US), INOX India (India), Linde PLC (UK), Air Products (US), Cryolor (France), Air Water (Japan), Wessington Cryogenics (UK), FIBA Technologies (US), and ISISAN (Turkey). These players have established a strong foothold in the market by adopting strategies, such as expansion, new product launch, and merger & acquisition.
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