Oil Refining Companies’ Red Ink Likely to Top Five Trillion Won This Year

SK Innovation, GS Caltex, S-Oil and Hyundai Oilbank recorded a business loss of over 4.8 trillion won in total for the first three quarters of this year. It is divided into approximately 2.2 trillion won in SK Innovation, 1.1 trillion won in S-Oil, 868 billion won in GS Caltex and 514 billion won in Hyundai Oilbank.

The major oil refining companies’ conditions are deteriorating due to the drops in demand and oil refining margin caused by COVID-19. The conditions are unlikely to get better in the fourth quarter with the coronavirus spreading again.

The oil refining margin, that is, the difference between their product price and their cost including the crude oil price, is currently US$0.36 or so per barrel whereas no profit can be anticipated at US$4 or less. Under the circumstances, the four companies’ capacity utilization dropped from 83.8 percent to 71.6 percent from January to October this year.