SEOUL (Reuters) - S-Oil Corp, South Korea’s third-biggest oil refiner by capacity, said it expects refining margins to recover in the second quarter, supported by tighter supply of refined products as many peers take plants off line for regular maintenance work.
The upbeat forecast from the refiner, whose major shareholder is Saudi Aramco, came as it reported a 6.2 percent increase in January-March profit.
“Second-quarter supply...will be eased on heavy maintenance,” Ko Gwang-cheol, head of the company’s investor relations department, said on a call with analysts. He said demand for gasoline typically also rises during summer as more American drivers use cars for holidays and outdoor activities. [REF/US]
Shares of S-Oil were up 2 percent by 0229 GMT, while the broader market edged down 0.7 percent.
In the first quarter, S-Oil’s operating profit increased 6.2 percent year-on-year to 270 billion won ($236 million) as inventory-related gains helped offset depressed refining margins.
Asia’s benchmark Singapore refining margins, or profits of processing a barrel of Dubai crude into refined products, slid to their the lowest since August 2013, at $1.52 a barrel, on Jan. 25. Benchmark margins have averaged $4.40 a barrel so far in April, up from $3.20 a barrel in the first quarter.
S-Oil, which has 669,000 barrels per day (bpd) of refining capacity, said it shut its No.2 residue fluid catalytic cracker (RFCC) for maintenance earlier than scheduled, citing next year’s introduction by the International Marine Organization of lower-sulphur marine fuel regulations. Maintenance is expected to be completed by mid-May.
The refiner also conducted maintenance for its 250,000 bpd No.3 crude distillation unit and 89,000 bpd condensate fractionation unit as scheduled in the first quarter.
Reporting by Jane Chung; Editing by Kenneth Maxwell
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