SK Innovation sees ‘solid’ Q2 refining margin on China’s reopening

SK Innovation, owner of South Korea’s top refiner SK Energy, said on Thursday (May 4) it expects a “solid” refining margin in the second quarter, backed by China’s reopening and the summer driving season.

The company did not specify how much it expects its second-quarter refining margin, a key profit metric for refiners, to be.

The company posted an operating profit of 375 billion won (S$375.5 million) for the first quarter ended March, versus 1.6 trillion won a year earlier.

That compared with an average analyst forecast of 175 billion won compiled by Refinitiv SmartEstimate.

Revenue rose 18 per cent to 19.1 trillion won.

SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at its plants in Ulsan and Incheon, said it operated its facilities at 80 per cent of capacity on average in the first quarter, compared with 77 per cent for the whole of 2022.

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It said it plans to carry out routine maintenance scheduled for its No 5 crude distillation unit (CDU) and No 1 residue fluid catalytic cracker (RFCC) in Ulsan in the second quarter.

Peer S-Oil, whose main shareholder is Saudi Aramco, said last week that regional refining margins in the second quarter had been adjusted downward recently, but it would be supported by increasing demand in the summer driving season.

Shares of SK Innovation, which also has a business supplying batteries for electric vehicles (EV), were trading up 3.4 per cent in morning trade, versus a 0.1 per cent fall in the broader Kospi index. REUTERS