Asian refining and marketing outlook remains stable: Moody’s

Mumbai, Nov 27 (IANS) Moody’s Investors Service on Friday said the outlook for the Asian refining and marketing industry is stable, with healthy demand for refined oil products driving an increase in output and supporting refining margins.

The American ratings agency said, in a release, that “Asian refining and marketing outlook remains stable and low oil prices and easing capacity overhang will keep margins healthy”, as it released its latest report “Refining and Marketing – Asia: 2016 Outlook – Modest EBITDA Growth and Easing Capacity Overhang Support Stable Outlook”.

“Industry’s EBITDA (earnings before interest, taxes, depreciation and amortisation) will grow by around 1 percent-3 percent through 2016, driven by healthy petroleum product demand and stable refining margins,” Moody’s said.

The report said Asian refining margin will stay healthy at $7-$7.5 per barrel, as lower oil and petroleum product prices push buyers to build refined product inventory, thereby boosting demand.

“We expect recent gains in margins will likely ease as a result of softened demand growth amid headwinds from China, with the Asian benchmark Singapore complex refining margin averaging a healthy $7.0-$7.5 per barrel in 2016,” said Moody’s vice president Vikas Halan.

This follows Moody’s expectation of a $1.5 per barrel year-on-year improvement in the Asia benchmark in 2015, as the sharp decline in oil prices and petroleum product prices pushed buyers to build refined product inventory.

“Capacity overhang will ease, helped by refinery closures in Japan, China and Taiwan. We expect demand growth, albeit weakening, to match or marginally exceed capacity additions,” it said.

Regarding India, Moody’s said demand growth will pick up to 5-6 percent as the domestic economy improves.

“But growing demand in India will not fully offset slowing growth in China,” the report cautioned.

India state-run oil marketers Indian Oil IOC, Bharat Petroleum and Hindustan Petroleum reduced their debt levels in the past 12 months.

Instead, “regional refiners recorded a significant inventory valuation loss when oil prices collapsed in 2014 and declined further through 2015”, said Moody’s.

Leave a Reply

Please enter your comment!

The opinions, views, and thoughts expressed by the readers and those providing comments are theirs alone and do not reflect the opinions of www.mangalorean.com or any employee thereof. www.mangalorean.com is not responsible for the accuracy of any of the information supplied by the readers. Responsibility for the content of comments belongs to the commenter alone.  

We request the readers to refrain from posting defamatory, inflammatory comments and not indulge in personal attacks. However, it is obligatory on the part of www.mangalorean.com to provide the IP address and other details of senders of such comments to the concerned authorities upon their request.

Hence we request all our readers to help us to delete comments that do not follow these guidelines by informing us at  info@mangalorean.com. Lets work together to keep the comments clean and worthful, thereby make a difference in the community.

Please enter your name here