Asia’s surging fuel exports depress refining industry profits

SINGAPORE (Reuters) by Henning Gloystein – Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits. Since 2006, the Asia-Pacific has been the world’s biggest oil consuming region, led by traditional industrial users South Korea and Japan along with rising economic powerhouses China and India. Yet overbuilding of refineries and currently sluggish demand growth have caused a jump in fuel exports from these demand hubs. Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, implying a slowdown in gasoline demand. For diesel, China National Petroleum Corp in January said it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990. The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over $2. Combine the slumping margins with labor costs and taxes and many Asian… continue reading

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