RPT-WRAPUP 1-Asia refiners cut runs as waning demand hits margin

(Repeat of story published late on Wednesday)

* Run cuts seen in Singapore, Thailand and Korea

* Cuts seen more extensive than in January as demand wanes

* Seasonal Q4 demand could offer relief

By Chua Baizhen

SINGAPORE, Aug 13 (Reuters) - Oil refiners in Asia have cut or are planning to trim crude processing rates, tracking moves by Western peers, as margins were hit by weakening fuel demand.

The cuts were led by Singapore Refining Co (SRC), which lowered rates by up to 7 percent at its 285,000 barrels per day (bpd) refinery, while Exxon Mobil Corp (XOM.N) might follow with an 8-10 percent reduction at its 605,000 bpd Singapore complex. [ID:nSP260527] [ID:nSP249551]

South Korean and Thai refiners are also cutting runs, signalling more extensive region-wide cutbacks than in January, when Japanese and Korean refiners pulled back runs after a mild winter and slowing Japanese economy hit fuel consumption.

At that time, firm demand in Australia and the Middle East kept Singapore plants running at full tilt. But soaring prices had dented consumption of motor fuels worldwide this time, hitting more refiners across Asia, Europe and the United States.

Complex margins in the Singapore refining hub halved in July from April to $4.97 a barrel and stood even lower in the last 15 days at an average of $4.13, Reuters data showed. <REF/MARGIN1>

But simple margins -- measuring the value of fuel produced from the first round of crude distillation -- rose to 47 cents a barrel over the last 15 days from a discount of $1.76 on average from May through July on tighter fuel oil supplies.

WIDESPREAD CUTS

Thai refiners, with a combined capacity of just above 1 million bpd, are considering cuts due to eroding margins, said PTTAR President Chainoi Puankosoom, who is also the spokesman for the country's refining industry. [ID:nSP165603]

"All refineries review their production plan to match oil prices every month. If they are going to make losses from exports, they will only focus on the domestic market," he said on Wednesday.

In South Korea, Hyundai Oilbank will be the first to cut refining rates to 300,000-310,000 bpd within the week, after raising them earlier this month. [ID:nSEO313158]

"There is so much supply from Northeast Asia. They have to cut runs sooner or later," said a trader.

Hyundai Oilbank is the smallest among the country's four refiners and the most sensitive to refining margins.

"It would be ideal to push the crude runs down below 300,000 bpd but we can only fiddle around with 10,000 bpd or so because of inventory levels," said a Hyundai Oilbank source.

An SK Energy source said the top refiner was also considering cuts but face the same issue of managing crude stocks.

Reflecting worries about fluctuating oil prices, a GS Caltex crude analyst said: "Margins are very volatile, so we can't say how much we will be running in September."

However, in Japan some refiners appeared resilient so far, as they return from or head into maintenance. The country also faced a heavy draw in gasoline stocks. [O/JAPAN1]

Cosmo Oil (5007.T) is running full steam to build up fuel inventories ahead of a turnaround later this month, which would take 44 percent of its 635,000 bpd capacity offline, it said.

An official from Taiyo Oil said its two crude units are operating at 110,000 bpd, near the maximum rate after the refiner returned from maintenance in mid-July.

Some other refiners could not be immediately reached for comments due to the "Obon" summer holidays.

POOR MARGINS

In the United States, gasoline crack spreads were around $5 a barrel late last month, down from a peak of $27 in July 2007, forcing refiners such as Valero Energy to cut output.

Some European refineries have also cut runs due to a slump in gasoline exports to the U.S., while local demand slid as motorists switch to more efficient diesel cars.

Asia had been supported in past months by China's gasoline and diesel buying binge ahead of the Olympics and a gas plant blast off western Australia, which pulled diesel from the region. But imports by the two countries had eased, and combined with hefty pump prices, growing supply and a lack of arbitrage outflows, diesel cracks have fallen to five-month lows around $22 a barrel, less than half the record of $45.17 in May.

Benchmark Singapore gasoline cracks against Brent fell into the red for the first time in recent years last month, trading between minus $1-$4 a barrel in the last few weeks.

CRUDE RESPONSE

Poor demand amid soaring fuel prices, quickening inflation and slowing economies worldwide have conspired to drive down global crude futures CLc1 by more than $30 a barrel from their peaks near $150 last month.

The falling processing rates in Asia are weighing on trading of Middle Eastern crude, and refiners are anticipating further declines in price differentials.

"Refiners are very cautious about buying crude now," a trader with a refiner said.

But some sellers cautioned against reading too much into the latest spate of refining cuts.

"We are already trading fourth-quarter crude. This is the demand season in Asia. Yes, economics are poor but even if refiners cut runs now, demand could be there for the fourth quarter," a seller said. (Reporting by Luke Pachymuthu, Felicia Loo, Maryelle Demongeot in Singapore, Osamu Tsukimori in Tokyo and Angela Moon in Seoul; Editing by Ramthan Hussain)