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Refiner Phillips 66 post smaller-than-expected loss on higher retail margins

August 03/2020

MOSCOW (MRC) -- Phillips 66 posted a smaller-than-expected loss as the refiner's retail marketing business, which buys and resells petroleum products, benefited from a decline in prices following the coronavirus crisis, reported Reuters.

The unit buys refined products from others and resells them, pocketing the difference and benefiting from improved margins when prices are down. The unit also sells other specialty products, including lubricants.

Credit Suisse analyst Manav Gupta said the marketing segment's earnings before interest and taxes of USD293 million beat the brokerage's estimate of USD220 million.

Refiners are seeing signs that fuel demand is picking up gradually worldwide as travel restrictions are eased, but a second wave of cases could lead to renewed lockdowns and derail demand recovery.

Rival PBF Energy Inc, which posted a bigger-than-expected loss, said the low point of demand, particularly for gasoline and diesel, appears to have passed with demand rebounding to about 80% of pre-COVID levels.

The company said jet fuel will likely take much longer to recover, and that it will continue to operate at lower volumes till "sustained product demand justifies higher production."

Phillips 66 reported a loss of 74 cents per share, smaller than the 93 cents analysts had expected, according to IBES data from Refinitiv.

"We believe this will be a trend this quarter and both MPC (Marathon Petroleum Corp) and DK (Delek US Holdings Inc) will put up earnings upside surprises driven by retail businesses," Gupta said.

Smaller rival Valero, which reported a smaller-than-expected loss on Thursday, said it saw a rapid recovery in demand in the second quarter and forecast current-quarter throughput, the amount of crude processed at its refineries, to rise over 5% sequentially.

As MRC informed earlier, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, Chevron Phillips, Marathon, Phillips 66, Russia, USA.
Category:General News
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