SK Energy, South Korea's largest refiner, slashed runs at its 840,000 b/d Ulsan complex to a record low due to a scheduled turnaround and sluggish fuel demand with rates unlikely to rise to above pre-maintenance levels after the works, a company source said.

It is operating the refinery at 65-70% of capacity after the 88,000 b/d No. 2 residue hydro-desulfurizer (RHDS) was shut for catalyst change from Oct. 15 to Nov. 21, the source said.

Before the works, the complex was running at 75-80%, the smallest this year except during a turnaround, according to the source. In the second quarter, average operating rates fell to 77% due largely due to works at the 260,000 b/d No. 5 crude distillation unit (CDU).

Runs at its sister refiner, SK Incheon Petrochem Co., are also lower than the 76% average recorded in the second quarter, tracking the cut in Ulsan, the source said, but declined to provide further details. SK Incheon operates at

275,000 b/d refinery that provides residue to the Ulsan complex via tankers, according to the source. SK Innovation owns SK Energy and SK Incheon.

 

"We cut Ulsan rates to 65-70% temporarily because of the RHDS turnaround. We don't want to build up stocks of feeds since we need less," said the source.

"Once the unit is back online, we will restore the runs to the pre-turnaround level of 75-80%. But we don't plant to raise runs further as COVID-19 situations are getting worse in Europe and the U.S. That will worsen fuel demand and margins."

South Korean crude throughput in September fell to a six-year trough due to maintenance works at S-Oil Corp. and as GS Caltex and Hyundai Oilbank (HOB) also lowered runs, sources said.

GS Caltex is operating its 800,000 b/d Yeosu complex at around 80%, a trading source said, while officials from the second-largest refiner in the nation were not available to confirm.

In early September, a GS Caltex official said that it was running the refinery flexibly at around 90% depending on supply and demand, as well as margins.

HOB cut runs at its 520,000 b/d Daesan complex to 75%, another source said.

Those cuts contrasts with Indian Oil Corp. (IOC) chairman Shrikant Madhav Vaidya comments that refiners in the world's third-largest oil consumer are on track to operate at full tilt by year end.

Indian refiners ramped up operating rates in September to the largest since March, the start of the COVID-19 pandemic in the country, data from the Petroleum Planning & Analysis Cell (PPAC) showed.

The increase, however, added to an already ample market in Asia and hampered refining margins, sources said.

Singapore Dubai cracking margins in the third week of October fell for a second straight week to $1.10/bbl, the smallest since the last week of September, according to SK Innovation.

 

--Reporting by Jongwoo Cheon, Jongwoo.Cheon@ihsmarkit.com;

--Editing by Raj Rajendran, Rajendran.Ramasamy@ihsmarkit.com

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