16 28 20 24 8 12 40 36 32
76% 78% 86% 80% 82% 84% 92% 88% 90% 94%
20
5-yr range 2023 2024 5-yr avg
15
10
5
0
-5
-10
0 4
2020 2021 2022 2023 2024 2025
Europe China
Russia and Caspian Asia ex-China
North America Operating rate % Demand
34 37 40 43 46 49 52 1 4 7 1013161922252831 Week No. -4
Rest of World
Middle East
Refining margins returned to traditional norms, with competitively weak sites in both Europe and Asia suffering economic run cuts due to the low-margin environment. These lower refining margins reflect several factors, with the key drivers being refinery capacity additions outpacing demand growth and several Very Large Crude Carriers (VLCCs) being cleaned and used to transport diesel/ gasoil from the Middle East to Europe. This helped offset the impact of higher freight costs from vessels diverting around southern Africa. Refineries are complex to commission; however, facilities such as Dangote in Nigeria were successfully commissioned during the year, lowering the imports of gasoline to West Africa. w Liquid renewables The year 2024 was challenging for the economics of liquid renewables. Using US Renewable Volume Obligation (RVO) credit prices as a proxy for the health of the sector, the 2024 annual average price collapsed to just more than 50% of 2023 levels as the supply of renewable liquids grew strongly. This over- supply reflected a surge in capacity that was commissioned during 2024. Given that liquid renewables are predominately supplied as a blend component to road fuels, the combined 230,000 b/d decline in demand for diesel/ gasoil across OECD Europe and the US, due to weak industrial production, exacerbated the supply overhang. This led to the harsh reality of numerous projects being cancelled, the Figure 1 Weekly five-year range gross refining margin ($/bbl)
Figure 2 Global ethylene annual capacity change vs demand change
most notable being Shell pausing its world- scale project in Rotterdam – a facility that was already under construction. Liquid renewables are more expensive to produce than fossil fuels, so their growing adoption requires sustained and stable regulatory and policy support. Sweden provided a stark example of the risks of relying upon policy as the key pillar for an investment. Sweden’s regulation focuses on greenhouse gas reductions, and for diesel, its target percentage reduction has been tightening from 21% in 2020 to 30.5% in 2023. However, this dropped to 6% in 2024 due to the high retail cost of diesel and its contribution to the cost-of-living crisis felt by the Swedish electorate. Sweden’s diesel can now be largely delivered by blending with FAME, so there has been a marked drop in the need for renewable diesel, further weakening the economics of renewable diesel production in Europe. x Commodity chemicals The global olefins market continued its expansion in 2024, but the year marked a low point for ethylene capacity investments, as shown in Figure 2 . Only 1.3 million tonnes per annum (Mtpa) of capacity was added in Asia, well below the 2020-2025 average of 8.7 Mtpa. In contrast, propylene capacity growth continued, primarily driven by propylene dehydrogenation (PDH) unit additions in China. PDH investments are expected to peak in 2024, reflecting poor margins.
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