Refining margins surge 71% in March
Deemed duty acts as a catalyst. Refineries can charge a tax, sell locally-produced diesel at imported diesel prices.
KARACHI:
Margins for local refineries jumped significantly by 71 per cent or $2.63 per barrel to $6.34 per barrel in March compared to the previous month on the back of higher contribution by deemed duty.
Deemed duty benefit increased to $3.39 per barrel owing to increase in oil prices, says a research note by Elixir Securities. Without the duty, margins would have averaged $2.95 per barrel during the month.
Deemed duty is a tax the government lets refineries charge in order to sell locally-produced diesel at the same price as imported diesel. This was imposed to protect refineries from volatility in international oil prices.
Improving product spreads
High speed diesel spread during March witnessed a massive expansion of $6.52 per barrel over the previous month as exports from Japan dropped after refineries shut down following the earthquake and tsunami.
Scheduled refinery shutdowns in Asia and growing demand from China further increased high speed diesel spreads, says Elixir Securities analyst Ali Ahmad Tiwana in the research report.
Petrol spread improved significantly due to record high demand in China and rising prices in the US owing to the approaching holiday season.
Motor gasoline spreads rose 27.7 per cent to $8.52 per barrel in March against the preceding month’s $6.67 barrel.
Naphtha prices also improved due to scheduled shutdown of naphtha plants in South Korea and the Middle East, said Tiwana.
Petrol margins to
remain strong
Petrol spread is likely to strengthen due to the peak driving season in the US during April to September, adds the research note. Increasing demand in Japan following shutdown of its refineries and the ongoing maintenance season in Asia, which started in March, are expected to strengthen margins significantly in coming months, said Tiwana.
Company-wise, National Refinery Limited experienced the biggest monthly increase in margins that rose $3.17 per barrel to $8.62 per barrel whereas Attock Refinery Limited’s margins were recorded at $5.91 per barrel, up 76 per cent on a monthly basis. Pakistan Refinery Limited recorded margins of $2.44 per barrel during March.
Published in The Express Tribune, April 2nd, 2011.
Margins for local refineries jumped significantly by 71 per cent or $2.63 per barrel to $6.34 per barrel in March compared to the previous month on the back of higher contribution by deemed duty.
Deemed duty benefit increased to $3.39 per barrel owing to increase in oil prices, says a research note by Elixir Securities. Without the duty, margins would have averaged $2.95 per barrel during the month.
Deemed duty is a tax the government lets refineries charge in order to sell locally-produced diesel at the same price as imported diesel. This was imposed to protect refineries from volatility in international oil prices.
Improving product spreads
High speed diesel spread during March witnessed a massive expansion of $6.52 per barrel over the previous month as exports from Japan dropped after refineries shut down following the earthquake and tsunami.
Scheduled refinery shutdowns in Asia and growing demand from China further increased high speed diesel spreads, says Elixir Securities analyst Ali Ahmad Tiwana in the research report.
Petrol spread improved significantly due to record high demand in China and rising prices in the US owing to the approaching holiday season.
Motor gasoline spreads rose 27.7 per cent to $8.52 per barrel in March against the preceding month’s $6.67 barrel.
Naphtha prices also improved due to scheduled shutdown of naphtha plants in South Korea and the Middle East, said Tiwana.
Petrol margins to
remain strong
Petrol spread is likely to strengthen due to the peak driving season in the US during April to September, adds the research note. Increasing demand in Japan following shutdown of its refineries and the ongoing maintenance season in Asia, which started in March, are expected to strengthen margins significantly in coming months, said Tiwana.
Company-wise, National Refinery Limited experienced the biggest monthly increase in margins that rose $3.17 per barrel to $8.62 per barrel whereas Attock Refinery Limited’s margins were recorded at $5.91 per barrel, up 76 per cent on a monthly basis. Pakistan Refinery Limited recorded margins of $2.44 per barrel during March.
Published in The Express Tribune, April 2nd, 2011.