At least two Asian refiners have trimmed their plant throughput in December due to weaker refining margins, and both companies are considering further cuts in January if the situation persists, market sources said Friday.
GS Caltex is reported to have cut its refinery runs by 20,000 b/d in December to 710,000 b/d at its 760,000 b/d Yeosu complex in South Korea, while Singapore Refining Company has trimmed operating rates at its 290,000 b/d refinery on Jurong Island by 10,000 b/d to 260,000 b/d.
"[There is a] high probability of further run cuts [by GS Caltex]," a trader with a North Asian refiner said.
Singapore's SRC is also said to be considering a further reduction in runs of 10,000-20,000 b/d in January, which would result in the refinery, which is jointly owned by Chevron and PetroChina, operating at a capacity of around 240,000-250,000 b/d.
"Refining margins came off drastically in the second half of November ... [and] depressed margins," a Singapore-based trader said.
Sources said Asian refiners have been hit on two fronts recently. They are the steep hikes in official selling prices of Middle East sour crudes announced by producers earlier this week and weak product cracks, especially naphtha, in the region.
This may lead to a slow start to trading of February-loading Middle East crudes.
"People are not aggressive in chasing February cargoes [of Middle East crudes]," the Singapore-based trader said.
