Korean oil refiners are likely to hit a record high of 7 trillion won ($6.38 billion) in operating profit, thanks to the rebounding refining margin, industry sources said.
The greatest performance in recent years was in 2011 when operating profit of the four companies reached 6.8 trillion won. In the first half of this year, the companies have already reached 70 percent of such record.
The rebounding refining margin has contributed to the sales rise, industry sources said.
The refining margin has been falling over the past six months, plummeting to $3 per barrel in August, The margin, however, started to rebound early this month, reaching $7 per barrel as of this week.
While the recent oil oversupply in the global market is pointed out as the culprit of the refining margin drop, the price started to go up again from this month as major oil refiners in the US and China started their regular facility maintenance work, experts said.
“The size of the regular maintenance work, especially for the US oil refiners, is expected to be larger in this fall compared to last year. Therefore, (the company) will keep the operation rate as now as the refining margin is projected to recover,” said SK Energy in the conference call for the second quarter.
The growth of the non-oil refining sector has also contributed to the sales rise as major companies have put efforts into expanding the petrochemical sector to reduce the business risk, such as lubricant and paraxylene.
The non-oil refining sector accounts to nearly 40 percent of the operating profit for SK Innovation, GS Caltex and S-Oil.
Oil refiners, however, are staying cautious of performance for the second half of this year as the refining margin may recover limitedly.
“The gasoline margin rebound is mainly due to the temporary supply and demand issue of the US. The further refining margin will be very limited,” said analyst Yoon Jae-sung from Hana Financial Investment.
By Lee Hyun-jeong (
rene@heraldcorp.com)
