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Refining margins have remained quite robust, even in the face of an
expected economic slowdown.With recent newsflow regarding the
upbeat expectations for Libyan production ramp-up and Iraqi
production, we take a look at changing dynamics for GRMs.
Positive Libyan newsflow weighs on light-heavy differntials: Upbeat
newsflow on Libyan production ramping up swiftly to 1.3mbopd by the
end of 2012 has raised expectations of availability of light sweet crude
for refiners. This, coupled with slowing economic growth is likely to
result in predominantly sour crude being cut back.
Refinery shutdowns/start-ups to cause an impact too: Per our
commodities team, an estimated 900kbopd of refining capacity is
expected to be shut down across the US/EU in 2012, while 810kbopd of
largely complex capacity is expected to start up in Asia - this will cause a
narrowing of light-heavy differentials as well.
But near–term Brent/Dubai could rise: Brent-Dubai differentials have
seen a sharp correction since the Libyan news broke. Given uncertainty
over whether Libya can actually ramp production up as quickly as stated,
continuing North Sea production issues and the correction already seen,
in the near-term, Brent/Dubai spreads could see a tick up - positive for
complex refiners.
Fuel oil has aided Singapore margins: Another factor that has aided
robust GRMs, even while diesel spreads have moderated from their post-
Japan highs has been fuel oil - strong performance in this product has
seen the premium earned by complex refiners over Singapore
benchmarks decline (as those refiners produce little or no fuel oil).
Margin watch: Benchmark GRMs remained firm, averaging $8.13/bbl
this quarter (vs. $7.49/bbl in 1Q12). Diesel spreads have corrected to
$17.6/bbl (from $19.6/bbl), while fuel oil losses have improved to
$8.1/bbl (vs. $12.1/bbl).
Fuel marketing watch: While crude has come off over the past few
weeks, depreciation in the INR has offset a portion of the gains. Diesel
losses stand at Rs8.2/lt over the last fortnight vs. Rs7.8/lt a month ago.
Petrochemical spread watch: Polyester-Naphtha spreads have remained
more robust than anticipated, at $1228/MT for the Sep quarter (vs.
$1145/MT in Jun quarter). Continuing tightness in the MEG market has
seen MEG-Ethylene at $595/MT in Sep quarter (vs. $404/MT in Jun).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Refining margins have remained quite robust, even in the face of an
expected economic slowdown.With recent newsflow regarding the
upbeat expectations for Libyan production ramp-up and Iraqi
production, we take a look at changing dynamics for GRMs.
Positive Libyan newsflow weighs on light-heavy differntials: Upbeat
newsflow on Libyan production ramping up swiftly to 1.3mbopd by the
end of 2012 has raised expectations of availability of light sweet crude
for refiners. This, coupled with slowing economic growth is likely to
result in predominantly sour crude being cut back.
Refinery shutdowns/start-ups to cause an impact too: Per our
commodities team, an estimated 900kbopd of refining capacity is
expected to be shut down across the US/EU in 2012, while 810kbopd of
largely complex capacity is expected to start up in Asia - this will cause a
narrowing of light-heavy differentials as well.
But near–term Brent/Dubai could rise: Brent-Dubai differentials have
seen a sharp correction since the Libyan news broke. Given uncertainty
over whether Libya can actually ramp production up as quickly as stated,
continuing North Sea production issues and the correction already seen,
in the near-term, Brent/Dubai spreads could see a tick up - positive for
complex refiners.
Fuel oil has aided Singapore margins: Another factor that has aided
robust GRMs, even while diesel spreads have moderated from their post-
Japan highs has been fuel oil - strong performance in this product has
seen the premium earned by complex refiners over Singapore
benchmarks decline (as those refiners produce little or no fuel oil).
Margin watch: Benchmark GRMs remained firm, averaging $8.13/bbl
this quarter (vs. $7.49/bbl in 1Q12). Diesel spreads have corrected to
$17.6/bbl (from $19.6/bbl), while fuel oil losses have improved to
$8.1/bbl (vs. $12.1/bbl).
Fuel marketing watch: While crude has come off over the past few
weeks, depreciation in the INR has offset a portion of the gains. Diesel
losses stand at Rs8.2/lt over the last fortnight vs. Rs7.8/lt a month ago.
Petrochemical spread watch: Polyester-Naphtha spreads have remained
more robust than anticipated, at $1228/MT for the Sep quarter (vs.
$1145/MT in Jun quarter). Continuing tightness in the MEG market has
seen MEG-Ethylene at $595/MT in Sep quarter (vs. $404/MT in Jun).
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