The share price of several Thai refinery stocks extended losses on Monday following negative sentiment in the refining market that saw margin of refining oil near zero, according to LSEG. Meanwhile, refiners in Thailand are concerned about a potential cancellation of a quoted price of Singapore Refinery Margin for Domestic sales that some analysts expect to erode profits of Thai refiners.
As of 11:46 local time in Bangkok, the share price of PTT Global Chemical Public Company Limited (SET: PTTGC) fell 3.72%, Star Petroleum Refining Pcl (SET: SPRC) dropped 3.36%, Thai Oil Pcl (SET: TOP) saw a 0.94% decline and Bangchak Corporation Pcl (SET: BCP) dipped 0.74%.
Global gross refining margin has been on a decline due to reduced demand for petroleum products, especially distillate fuel oil. This is due to a number of factors, including a slowing economy, a decline in manufacturing activity, and a shift to alternative fuels.
The Singapore refinery benchmark, Refinery Margin Netbacks Dubai Crack-Singapore Refinery Profit has declined nearly 100% from $4.69 per barrel on January 9 to merely $0.25 on January 20, 2025.
Meanwhile, Thai refiners have been using the Singapore benchmark for price quotation, but the former prime minister Thaksin Shinawatra, who has been helping the ruling Phue Thai Party during their campaign, aims to terminate that benchmark.
PTT Public Company Limited (SET: PTT), a state-owned oil and gas company in Thailand, explained last year that in Thailand, oil prices are referenced based on the Singapore oil market, recognized as the regional hub for Asia. Notably, these prices do not represent the refinery gate prices in Singapore or those at local service stations, but rather the prices agreed upon by traders in this central market.
This approach to oil pricing is similarly applied by other countries in the region, such as the Philippines, Indonesia, and Australia, which rely on the transparent and reliable pricing mechanisms provided by the Singapore market.
The credibility of the Singapore oil market stems from its robust participation, with hundreds of buyers and sellers actively engaged. This extensive involvement ensures that the prices reflected in the market are a true representation of market forces, making it a reliable benchmark for pricing references.
