Asian oil refiners outside Japan will fare better than their global peers this year even amid weaker processing margins as they produce more diesel and supply more fuel to China, according to Moody’s Investors Service.
Asian processing margins will be supported by refiners’ output of middle distillates such as diesel, Simon Wong, a senior analyst at Moody’s in Singapore, said in an e-mailed report today. Diesel demand will remain robust in 2012 on use by emerging economies, and China will account for 40 percent of the world’s oil-consumption growth, he said.
Global crude-processing capacity may increase by 2.4 million barrels a day this year, outpacing demand growth of 1.4 million and causing refinery utilization rates and margins to fall, according to the report. While Asia’s crude distillation capacity will expand by 200,000 barrels more than demand, most additions will start operating only in the final quarter, Moody’s said.
“The outperformance of Asian refiners will be led by their higher proportion of middle-distillate output and China’s above- average demand for refined products,” said Wong, who is based in Singapore. “We expect market fundamentals for diesel to remain strong, given robust, non-OECD demand from transport, industrial, and power-generation sectors.”
Middle-distillate oil products account for 70 percent of output at PetroChina Co. (857), the nation’s second-biggest refiner, Moody’s said. The proportion for refineries in Thailand is 46 percent and 43 percent for those in South Korea, according to the report, which didn’t give an estimate for Western refiners.
Risks to Asian processing margins include higher crude costs if refiners switch from cheaper Iranian crude following U.S. and European Union sanctions against Iran, the report said.
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