Markets in Europe and the United States will take
the lead in the short-term recovery from COVID-19
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With global capacity closures of about 2.5 million barrels per day already announced for the next few years, European and US hub utilization will return to sustainable levels in the short term under the Reference Case. Asian utilization recovery will lag due to overcapacity from new projects in the next few years.
Hub utilization and margins will be less volatile in Asia than in other regions in the long term. They will also stay higher for longer across all scenarios due to demand growth, slower decline, and attractive pricing.
Asia will be most resilient
in the long term
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Independent of demand cases, the refining industry may shrink in some regions but is expected to maintain at least 90 percent of 2019 capacity, even in the Accelerated Transition case.
The industry will remain large
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The timing of capacity shutdowns has at least as much impact on margins as shutdowns themselves, and will drive the risk profile for many refiners considering closure.
The pace of rationalization imposes risk
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Profitability will decrease in both the Reference Case and the Accelerated Transition case, forcing refiners to adapt to changing demands and push operational excellence or value-chain integration. Many players may consider processing options for biofeedstocks.
The refining industry will become less profitable
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