S.Korea's SK Innovation sees favorable refining margins in H2
SEOUL (Reuters) — SK Innovation Co Ltd, the owner of South Korea's top refiner, said on Thursday that it expects solid demand to keep refining margins healthy in the second half of this year.
Buoyed by strong demand for oil products, refining margins in Asia are hovering near five-month-highs, sitting at $7.43 per barrel on Thursday, Reuters data showed.
"We expect refining margins to remain favorable on the back of solid demand," the owner of SK Energy said in an earnings statement.
A day earlier, S-Oil, the country's third-largest refiner, also said refining margins were expected to remain stable in the second half, boosted by demand growth from China and India.
SK Energy said diesel demand was expected to improve, driven by demand from emerging countries and a global economic recovery.
"The main drivers will be growing diesel demand from China and India," said Lee Yun-hi, head of corporate planning office at SK Energy.
Lee said gasoline margins are expected to increase gradually or remain flat in the third quarter from the previous quarter, backed by refinery maintenance plans in Mexico and demand from Africa and South America.
Fuel oil is also likely to stay strong amid falling supply from Russia and lower levels of heavy crude oil as major crude exporters such as Saudi Arabia have cut supplies of heavy crude to comply with OPEC-led production cuts, he said.
SK Innovation said crude distillation units (CDU) at its refineries in Ulsan and Incheon operated at 81% of capacity on average in the second quarter, down from 91% in the previous quarter due to its planned maintenance.
SK Energy has no large-scale maintenance plans in the third quarter and beyond, but has some small-scale maintenance plans which will not affect the refiner's run rates, Lee said.
For the April-June period, operating profits fell 62% to $378.4 MM over the same period a year ago due to a drop in crude oil prices and maintenance, according to the company statement.
SK Innovation's shares fell 0.85% to 176,000 won each as of 0231 GMT.
Reporting by Jane Chung; Editing by Richard Pullin
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