SEOUL (Reuters) - South Korea’s S-Oil Corp said on Wednesday refining margins are expected to improve in the fourth quarter, supported by increased demand for kerosene and diesel ahead of the winter season.
“However, the rebound would be limited due to re-spread of COVID-19,” said the country’s third-largest refiner, whose main shareholder is Saudi Aramco, in an earnings statement.
It had conducted an unplanned maintenance for its No. 2 residue fluid catalytic cracker, with 76,000 barrels per day (bpd) capacity, impacted by a typhoon in September, the company said in a conference call.
Sources had previously told Reuters the unit’s outage following typhoon Haishen had briefly lifted petrol margins.
Opportunity cost lost by the shutdown was about 20 billion won, an executive said.
The company plans to maintain run rate of around 80% for petrochemicals in the current quarter, while staying at the near-maximum level for the refining sector.
S-Oil expects its capital expenditure in 2021 to be at or below this year’s level as the company cannot predict its performance next year.
S-Oil reported an operating loss of 9.3 billion won ($8.25 million) for the third quarter, compared with a 231 billion won profit a year earlier but improving from a 164 billion won loss in the second quarter due to gradual demand recovery.
This was its third consecutive quarter of operating loss.
Inventory-related gain was 133 billion won in July-September quarter, compared with a loss of 171 billion won in the previous quarter, it said.
The company said it operated its 669,000 bpd CDUs in the southeastern city of Ulsan at 90.7% capacity on average in the July-September period, down from 99.8% in the second quarter.
Shares of S-Oil were trading down 0.4% as of 0238 GMT, while the wider market was trading 0.2% lower.
($1 = 1,127.2200 won)
Reporting by Joyce Lee and Heekyong Yang; Editing by Shri Navaratnam and Krishna Chandra Eluri
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