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    6505   TW0006505001

FORMOSA PETROCHEMICAL CORPORATION

(6505)
  Report
End-of-day quote Taiwan Stock Exchange  -  2022-12-01
83.50 TWD   -0.95%
11/03Formosa Petrochemical Corporation Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2022
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11/01Taiwan's Formosa Petrochemical, CPC Raise Fuel Prices
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10/11Taiwan's Formosa Petrochemical, CPC Cut Gasoline Prices
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Global gasoline cracks collapse, blow to refiners' profits

07/25/2022 | 05:20am EST
FILE PHOTO: Gas prices over the $6.00 mark are advertised at a 76 Station in Santa Monica, California

(Reuters) - A sudden crash in global gasoline prices in the past two weeks has dented refiners' profits, pushing up inventories in key trading hubs around the world while looming exports from China and India also add to pressure on growing stockpiles.

Refiners will be forced to cut gasoline output to safeguard themselves against losses and switch to producing more profitable fuels, traders say, but summer demand is also being hurt by high pump prices in the United States and Europe, and by instability and easing seasonal demand in some parts of Asia.

This has led to a rise in inventories from Singapore to Amsterdam-Rotterdam-Antwerp and the United States, according to traders, analysts and inventory data.

Graphic: Gasoline stocks at key hubs,

Asia's top fuel exporter Taiwan's Formosa Petrochemical Corp could reduce operating rates at their residue fluid catalytic cracking (RFCC) units, which are now running at full capacity, by 5% in the coming weeks.

"We will sell more VLSFO (very low sulphur fuel oil) because their margins are better," Formosa's spokesperson K.Y. Lin told Reuters. VLSFO can be used as a feedstock for RFCC units to produce gasoline or sold as marine fuel.

Asian gasoline margins have plunged more than 102% in July to a discount of 14 cents a barrel to Brent crude after hitting a record at a premium of $38.05 a barrel in June, Refinitiv data showed. They are also at the lowest for this time of the year since at least 2000.

That has depressed Asian refining margins to 88 cents a barrel over Dubai crude on Monday, tumbling from a record $30.49 in June. Graphic: Global oil refining margins,

Chinese state refiners are expected to raise refinery runs in August-September and increase exports to lower high domestic stocks after receiving new quotas, industry sources said.

One of the sources estimated national crude throughput could claw back to 14 million barrels per day or higher, after staying under that level for most of the past 12 months partly because of COVID-19 lockdowns.

India's gasoline exports could rise by 15,000-20,000 bpd, bringing August and September exports to an average of 260,000 bpd, consultancy FGE estimates, following the removal of gasoline export duty last week.

Meanwhile, first-half July gasoline imports into Asia dropped 240,000 tonnes from second-half June levels led by Indonesian declines, Asia's largest gasoline importer, FGE said in a note.

In Sri Lanka and Pakistan, demand has been hit by economic and political turmoil, further exacerbating the thinning of regional margins, traders said.

FGE expects Asian gasoline demand, excluding China, to improve only marginally between July and September, averaging 80,000 bpd lower than levels seen during the same period in 2019, as high retail prices weigh on demand. Graphic: Asia traffic,

UNITED STATES, EUROPE

In the United States, gasoline products that are derivatives of gasoline - a proxy for demand - was about 8.5 million bpd, or about 7.6% lower than the same time a year ago, government data show. [EIA/S]

Graphic: U.S. traffic,

"Refinery production increased throughout June in response to high crack spreads. At the same time, gasoline consumption decreased below 2021 levels beginning in April," according to the EIA's short-term energy outlook.

The so-called 321 crack spread, a proxy for refining margins, have fallen to the lowest in more than three months at $37.57 a barrel last week, down from historical highs of nearly $60 in June but still well above seasonal levels.

Meanwhile, gasoline spot prices in New York Harbor have fallen to $3.35 in mid-July from $4.43 per gallon in June, traders said.

"Refiners must be concerned about the large storage builds during the summer driving season, and I would not be surprised to see another hit to the refinery utilisation rate in next week's report," said Bob Yawger, director of energy futures at Mizuho.

In Europe, traffic congestion data from navigation data group TomTom suggests urban fuel demand has started falling.

Graphic: Europe traffic,

Inventories in the region have also increased reflecting the trend. Gasoline stocks were up 2.4% year-on-year in June, Euroilstock data showed.

Northwest European gasoline barge refining margins were around $10 a barrel on Friday, down from a record $56 in early June.

Citi analysts, however, expect refining margins to strengthen again into the fourth quarter due to a demand boost from potential gas-to-oil switching in Europe and further reduction of Russian diesel exports from European Union sanctions.

(Reporting by Mohi Narayan in New Delhi, Laura Sanicola in New York, Shadia Nasralla in London and Chen Aizhu in Singapore; Editing by Florence Tan and Jacqueline Wong)

By Mohi Narayan, Laura Sanicola and Shadia Nasralla


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
BRENT OIL -1.49% 85.9 Delayed Quote.11.95%
FORMOSA PETROCHEMICAL CORPORATION -0.95% 83.5 End-of-day quote.-12.93%
MSCI SINGAPORE (GDTR) -0.77% 5693.85 Real-time Quote.-8.60%
S&P GSCI BRENT CRUDE INDEX -1.51% 728.2562 Real-time Quote.11.70%
TOMTOM NV -4.74% 7.645 Real-time Quote.-16.08%
WTI -1.34% 80.208 Delayed Quote.6.45%
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Financials
Sales 2022 875 B 28 579 M 28 579 M
Net income 2022 40 576 M 1 325 M 1 325 M
Net cash 2022 66 946 M 2 187 M 2 187 M
P/E ratio 2022 19,4x
Yield 2022 6,26%
Capitalization 795 B 25 983 M 25 983 M
EV / Sales 2022 0,83x
EV / Sales 2023 0,93x
Nbr of Employees 6 189
Free-Float 12,4%
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Technical analysis trends FORMOSA PETROCHEMICAL CORPORATION
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Mean consensus HOLD
Number of Analysts 10
Last Close Price 83,50 TWD
Average target price 79,59 TWD
Spread / Average Target -4,69%
EPS Revisions
Managers and Directors
Ming Tsao General Manager & Director
Chien Tang Tsai Chief Financial Officer & Deputy Spokesman
Pao Lang Chen Chairman
Yu Cheng Independent Director
Chang-Pang Chang Independent Director
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