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Thai PTT expects higher refining margins, lower petrochemical prices in 2016
Updated: 2016-02-25 09:30 Source: Market Report Company share:

Thailand's state-owned oil company PTT expects higher gross refining margins in 2016, but expects prices of aromatics and olefins to soften, reported TPS with reference to the company's statement.

PTT, the parent company of refineries and petrochemical producers like Thai Oil, IRPC, and PTTGC, reported healthy profits in its refining and petrochemical business in 2015, based on its consolidated numbers for 2015 released last week.

The company's management foresees a 2016 Singapore gross refining margin at USD8-9/b, an increase from USD7.70/b in 2015. Aromatics and olefins prices in 2016 are expected to trend down due to oversupply. The company did not state its petrochemical margin forecasts.

Aromatics prices are expected to be lower with paraxylene (PX) prices forecasted at USD743/mt on average as lower growth in purified terephthalic acid (PTA) and polyester demand is expected, amid a continuing supply glut. Benzene is forecast to average USD579/mt.
High density polyethylene (HDPE) prices are expected to average USD1,091/mt amid low-cost coal-to-olefins (CTO) production in China, and competitive shale gas technology. Polypropylene (PP) prices are expected to average USD874/mt.

A better performance in aromatics was mainly due to higher spreads, amid lower fuel costs in crude oil/condensate, as well as a decrease in inventory write-downs. Meanwhile, product spread margins for both PX and benzene decreased, especially in benzene because of oversupply in Asia and thin demand in China amid lower growth.

The overall performance of olefins was poorer compared with the prior year because spreads decreased from polymer price drops, even though sales volume and utilization rates increased.

The company expects the world economy to grow at a faster pace 2016 especially in emerging markets and developing economies hit by economic distress in 2015 such as Brazil and Russia.

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