COVID-19 Accelerates Refinery Shutdown
The refining industry is at the cusp of transition due to the severe jolt given by COVID-19 pandemic. The pandemic has accelerated the transition process, coaxing companies to fast-track the pursuit of their future plans and at the same time part with assets which have a bleak chance of operational profitability.
As refined product demand declined through the first half of 2020, it exerted pressure on refining assets, particularly the ones with narrow margins and low competitive position. While refiners were able to partially offset the losses by shutting or divesting few of the weak assets, the pandemic driven downturn, coupled with impending transition has also weakened the inter-regional trade activity. The refiners are therefore unable to find buyers for many assets and in the absence of any potential buyer or alternative use, are idling the facilities.
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This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.