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Falling cracking margins bode ill for refiners

All News 17:36 December 16, 2019

SEOUL, Dec. 16 (Yonhap) -- A key measure of oil refining companies' profitability has fallen in recent months, industry data showed Monday, raising speculation that South Korean refiners' earnings could worsen in the current quarter.

The benchmark Singapore complex gross refining margin stood at zero dollars per barrel in the second week of December, down from $0.2 in the first week of December, according to the data.

It marked a sharp decline from the third week of September, when the refining margin hit this year's high of $10.10.

Singapore is the regional trading hub of the benchmark Dubai crude.

The margin is the difference between the total value of petroleum products coming out of an oil refinery and the cost of crude and related services, including transportation.

South Korean refiners usually say their break-even point is between $3.5 and $4.5 per barrel.

Local refiners have been gripped by weak prices of key products such as petrochemicals and narrowing refining margins, with their third-quarter performance hovering below market expectations.

For one, SK Innovation Co., South Korea's top refiner, saw its third-quarter net profit tumble 62 percent on-year to 174.2 billion won (US$148.4 million) on a consolidated basis.

Falling cracking margins bode ill for refiners - 1

entropy@yna.co.kr
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