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S-Oil expects fourth quarter refining margins to improve on demand for winter season

October 28/2020

MOSCOW (MRC) -- South Koreas 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, said Reuters.

However, the rebound would be limited due to re-spread of COVID-19, said the countrys 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 units 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 years level as the company cannot predict its performance next year. S-Oil reported an operating loss of 9.3 billion won (USD8.25 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.

As MRC informed earlier, on 4 October 4, S-Oil resumed propylene production at its Catcracking Unit N2 in Onsan (Onsan, South Korea). This plant with a capacity of 705,000 tonnes of propylene per year was closed on 7 September this year due to Typhoon Haishen (Super Typhoon Haishen).

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

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Author:Anna Larionova
Tags:petroleum products, PP, PE, neftegaz, petrochemistry, S-Oil.
Category:General News
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