Hengyuan seriously looks to me cheaper now at RM 7.27, then when it was at RM 4.60...

the crack spread at the time compared to current and the visible prospect we can see now is just too convincing

I truly hope it can touch double digit soon

S-Oil export to Malaysia, so Hengyuan can be almost certain the same margin

https://www.brecorder.com/news/40174604/gasoline-crack-scales-new-high-on-supply-worries

NEW DELHI: Asia’s gasoline crack hit yet a record high on Friday and posted a weekly gain of over 20% after South Korean refiner S-Oil suspended production of several processing units following a blast at its Onsan refinery.

The refining profit margin for gasoline climbed to $37.27 a barrel, up from $31.75 in the last session. Gasoline margins have rallied this week on the back of growing driving season consumption.

The shutdowns at S-Oil units following Thursday night’s blast that killed one person is expected to affect already tight gasoline supplies in Asia.

The refiner exports gasoline mainly to Japan, Malaysia, Australia, Singapore and the Philippines. Indian state refiner MRPL issued a tender for the sale of 25,000 tonnes of 95-octane grade of gasoline for delivery during 17-19 June. The tender closes on May 23. India’s gasoline exports declined to 1.40 million tonnes in April from 1.60 million tonnes in March, government data showed on Friday.

..........

walao!...they export to Malaysia? Then confirm Hengyuan same margin lor....

Posted by information > May 21, 2022 4:32 PM | Report Abuse

Asian gasoline cracks scale new heights following Ulsan refinery explosion.

Asian gasoline cracks soared to new highs on Friday after an explosion at a South Korean refinery compounded an already-tight regional supply picture.

Trade Friday saw a 92 RON cargo for loading 20-25 days ahead sold by Total to Vitol at $148.90/b. PetroChina sold 95 RON to Vitol for the same laycan at $157.20/b FOB.

Taken as value, the deals lifted refining margins to Brent to new highs as the 92 RON spot crack to Brent was marked $4.99/b higher at +$38.74/b and 95 RON a massive $8.32/b at +$47.04/b.

The move comes after an explosion at alkylation processing unit of the 580,000 bpd Onsan refinery left eight injured.

Owned by S-Oil, the refinery is the world's fifth-largest and any restriction of supply will put regional import pressure on an already-tight global market.

The jump was seen in the overnight market, with the east-west spread jumping by the European close on Thursday.

It comes against a backdrop of booming products demand, with tight supply as the global economy reopens from the Covid-19 pandemic having driven cracks to record highs even before Thursday’s accident.

Diesel’s High Cost Due to Refining Capacity Shortage, Exports, Experts Say

https://www.ttnews.com/articles/diesels-high-cost-due-refining-capacity-shortage-exports-experts-say

With record-high diesel and gasoline prices across the country, oil industry analysts told Transport Topics the runaway energy market isn’t being caused exclusively by higher crude prices or the U.S. economy driving demand for petroleum products.

Rather, it mostly is caused by a severe shortage of refining capacity, especially on the East and West Coasts, to produce oil into gasoline, diesel and other critical energy products.

..

“The big picture on diesel is a slow-moving nightmare,” oil industry analyst Phil Flynn told TT. “We have closed a lot of refineries, and those were big producers. There is a global shortage of capacity, and we are losing the refining capacity faster than we can replace it. There is no easy answer here.”

Its the 5th largest refinery in the world

https://www.nesfircroft.com/blog/2021/08/the-6-biggest-refineries-in-the-world

South Korea’s third-largest refiner may cut gasoline exports, further tightening supply in Asia

https://www.kedglobal.com/energy/newsView/ked202205200014

“The affected plant will be shut down until the root cause is identified and preventive measures are put in place,” Chief Executive Hussain A. Al-Qahtani said, apologizing during a press conference.

https://www.youtube.com/watch?v=9iFQ0BLp4wM

anyone who would like to understand how the crack spread hedging works, you may go through Pg 26 - 28 (it only takes 10 min to understand)

http://www.kisfutures.com/GuideEnergyHedging_NYMEX.pdf

This is in case any investors are still confused how hedging works and that hedging gain or loss is purely to show the opportunity gained and the loss opportunity respectively if at all hedging were not made.

The margin expected during hedging will always be realized.

Hengyuan only hedges about 25% of quarterly sales volume in a quarter looking at its contract size. This is inline with any refinery standard practise.

Further, hedging is only maximized when margin is thin (high risk) to ensure they generate money to support the S&A cost (wages), and not when margin is erupting..

For everyone's reading pleasure:

https://klse1.i3investor.com/blogs/2017/2022-05-21-story-h1623337153-Asian_companies_to_ramp_up_petrol_exports_to_US_as_sky_high_prices_beck.jsp

The great thing is WTI already rise above Brent, Asian refineries truly will match profits US makers will make

Asian companies to ramp up petrol exports to US as sky-high prices beckon

https://www.business-standard.com/article/international/asian-companies-to-ramp-up-petrol-exports-to-us-as-sky-high-prices-beckon-122051900286_1.html

US pump prices have now risen above $4 a gallon in all states for the first time ever as the summer driving season approaches. JPMorgan Chase & Co. forecast this week that American gasoline could surge to as high as $6.20 a gallon by August, which would be more than double the price a year ago.

...

We will be partying here at least till august - the climax looks like..

keyword-strong refining cracks

Truly crazy pang72...its unbelievable its happening in asia now

Petron reports strong Q1 results; posts P3.6 billion net income, double Q1 last year
https://www.petron.com/news/petron-reports-strong-2022-q1-results/

As the country slowly emerges from the pandemic, industry leader Petron Corporation continued to regain significant volumes, taking advantage of the strong refining cracks in the region, its first quarter results show.

Right now, market shd completely ignore whatever shit earnings its going to report for Q1..Q2 every month its already generating RM 1 eps.. if this stock does not hit double digit price within next 2 or 3 trading days..its competely f..king blind!

WTF...

@valueguru, thanks

good sslee, once u lose trust you will never get back

suggest to stay away also as you will again talk bad about HRC

Posted by Sslee > May 20, 2022 10:46 AM | Report Abuse

I already sold Hengyuan because I do not trust Hengyuan management. Now I only hold Petronm and Petronm-CY.

warren buffet fund sapu petronm looks like after Chevron

yes Pang72..

petron i am not expecting much on Q1 as their actual refining capacity is too small and product mainly gasoline have not benefitted unlike diesel (crack spread shot up in Q1 itself) which hengyuan produce significantly..

just want to reduce expectation here - of course if EPS turns out very good the better for all

Posted by pang72 > May 20, 2022 10:05 AM | Report Abuse

...... Every number every news are pointing to record price..
Hopefully petron QR out today so we can digest the earning this weekend..

a 580k bpd refinery shutting down at this time is unimaginable...

OMG..

The fire and the possible shutdown of a large refinery come at a time when global refining margins are sky-high amid insufficient refinery capacity worldwide.

Refinery capacity globally is now lower than before the pandemic after some refineries closed permanently after COVID crippled fuel demand in early 2020.

Firefighters received a report of an explosion at the refinery in the Onsan Industrial Complex in Ulsan owned by S-Oil shortly before 9 p.m. local time on Thursday. The explosion took place during the processing of crude oil into petroleum, Yonhap quoted authorities as saying.

The Onsan refinery has three crude distillation units with a combined capacity of 580,000 barrels per day (bpd), according to Argus, which reports that market participants say a full shutdown of the refinery is likely.

@cactus, looks like crack spread will shoot even higher with that event, RM3 is secured for Q2

people are missing such precious opportunity...stock price is grossly undervalued

a lot of investors are confused on its hedging effects

when you hedge, you had already secure the margin during the time of hedging

the hedging loss or gain is merely the accounting of 'lost opportunity' if you had not hedged earlier when maturity of the contract takes place - this does not affect the already hedged margin

the hedged margin is always secured

@searchingmoney, i had hunch this was happening..

that means summer there will further boost demand for gasoline from here

i am estimating it would take half a decade for the margin to drop to $13/brl from current value above $20/brl

to add new refining capacity takes ages

Posted by TakeProfits > May 18, 2022 11:24 PM | Report Abuse

Hi probability...you mean Hengyuan won't ever reach mr23. Please enlighten me and all of us. Thank you very much !

market is still in denial mode, it wants to treat this refinery margin rise phenomenon like gloves

it has not figured out that the required margin for Hengyuan to hit RM 24 at PE 5 is only $ 13/brl
it can wait half a decade for the margin to reach that level..
the more you ponder deep on what is actually happening globally the increasingly evident the above would become

even Putin died, EU is not gonna tap into Russian oil & its refined products for the next few years till Russian economy collapse

FYI, the Hurricane season in U.S begins June and runs through November.

https://www.nbcnews.com/business/consumer/why-gas-prices-high-when-will-back-down-rcna28314

JP Morgan forecasts “higher for longer” refining margins
May 17, 2022
https://currencytrader.review/jp-morgan-forecasts-higher-for-longer-refining-margins/

after results may be HLIB will come with TP

scenario 3, should be hedging gain

hedging is only done when margin is thin, Q2 onwards you can be certain they wont hedge

quite a strong statement from HLIB:

“Our findings have led us to believe that the surge in refining product margins is a lingering problem arising from structural issues: surge in demand post-pandemic, supply shortage due to years of underinvestment and ESG-related pressures, and sanctions on Russian oil — all of which would not be able to be addressed in the immediate term,” it said."

well said..totally agree

MAY 15 2022

Read more at: https://www.deccanherald.com/opinion/how-russian-is-it-a-very-crude-question-1109435.html

While Europe may stop buying Russian crude, it’s unlikely to be able to avoid diesel fuel made from that crude. The direct diesel trade between Russia and European countries may halt, but products made from Russian crude in overseas refineries will still arrive at European ports. Russian crude processed in overseas refineries ceases to be Russian. Diesel produced at, say, an Indian refinery is Indian diesel, no matter whether the crude came from Saudi Arabia, Russia, or anywhere else. Products are made to tight specifications required in consuming countries and there is no mechanism to determine where the crude they were produced from originated.

Post removed.Why?

Updated with 3 more Russian vessels. April itself 4 vessels now!

https://klse1.i3investor.com/blogs/2017/2022-05-15-story-h1623242016-Twitter_tracker_shows_Russian_Urals_crude_coming_to_Malaysia.jsp

Since Urals dipped, they have actively increase the intake beginning April. At least 4 vessel per month now

updated with more vessel

https://klse1.i3investor.com/blogs/2017/2022-05-15-story-h1623242016-Twitter_tracker_shows_Russian_Urals_crude_coming_to_Malaysia.jsp

If every month 1 - 2 vessel, thats already huge savings...

Some news in Mar 22'- to show significance of Russian crude

https://english.alarabiya.net/business/energy/2022/05/11/Hungary-says-its-backing-of-EU-s-Russia-oil-ban-hinges-on-millions-of-dollars

MOL’s refining margins have been boosted by its cheap Russian oil intake and also a jump in its diesel and gasoline crack spreads.

According to MOL’s data, its refinery margin rose to $33.7 per barrel in March from $3.4 in February.

Difference between Urals and and Brent oil price from December 31, 2021 to May 5, 2022

https://www.statista.com/statistics/1298092/urals-brent-price-difference-daily/

Thu, Apr 28, 2022

Russian oil – oil tanker data revelation

https://www.express.co.uk/news/world/1602687/south-korea-news-russian-oil-tanker-data-ukraine-war-spt

Fifty-two were going to China, 28 to South Korea, 25 to India, nine to Japan and one to Malaysia


How many barrels can load in VLCC?

https://www.mol-service.com/blog/how-large-is-the-very-large-crude-carrier

Then, how much crude oil can load in VLCC, the Very Large Crude Carrier?
The size of cargo tanks varies from ship to ship, but many of the recently built VLCCs are designed to load about 2 million barrels of crude oil.

.....

Hengyuan processing capacity per Quarter is 10 million barrels, at 16% Russian Crude, it needs about 1.6 million barrels

https://twitter.com/RUTankerTracker

Need to scroll down to the particular date i mentioned in the posting to check & verify yourself

Malaysia does not recognise unilateral sanctions, remains non-aligned to any side

https://www.malaymail.com/news/malaysia/2022/05/08/saifuddin-malaysia-does-not-recognise-unilateral-sanctions-remains-non-alig/2057677

REPOSTING IMPORTANT INFORMATION JUST DISCOVERED.


Posted by probability > May 14, 2022 11:20 AM | Report Abuse X

Difference between Urals and and Brent oil price from December 31, 2021 to May 5, 2022

https://www.statista.com/statistics/1298092/urals-brent-price-difference-daily/


Thu, Apr 28, 2022

Russian oil – oil tanker data revelation

https://www.express.co.uk/news/world/1602687/south-korea-news-russian-oil-tanker-data-ukraine-war-spt

Fifty-two were going to China, 28 to South Korea, 25 to India, nine to Japan and one to Malaysia


How many barrels can load in VLCC?

https://www.mol-service.com/blog/how-large-is-the-very-large-crude-carrier

Then, how much crude oil can load in VLCC, the Very Large Crude Carrier?
The size of cargo tanks varies from ship to ship, but many of the recently built VLCCs are designed to load about 2 million barrels of crude oil.

.....

Hengyuan processing capacity per Quarter is 10 million barrels, at 16% Russian Crude, it needs about 1.6 million barrels

the above will have profound implication to Hengyuan's earnings, if only they manage to continue sourcing russian crude after the war..

i see its not that difficult considering its just a continuation of what they had already been doing in 2021

sorry, wrong calculation on russian oil savings above, the savings calculated was per month, for a quarter you need to multiply above savings by 3

Difference between Urals and and Brent oil price from December 31, 2021 to May 5, 2022

https://www.statista.com/statistics/1298092/urals-brent-price-difference-daily/

havent bring russian oil into the equation yet

just 16% of russian feed (as per annual report) at 30 USD/brl discount against brent

will be saving HRC 67m or net additional PAT of MYR 52m per qtr. That itself is like additional 17.4 cents pert qtr or 69 per annum, PE5 already RM 3.50

forget about all this refining margin rise, HRC share price rise havent even justify Russian crude oil savings which they had already been consuming....

who knows may be they can raise it more to 50% of their feed

It should gap up above RM7.33..with this kinda crack, if market really realize it should rise more than RM 1 the first trading day

the rise in crack spread we are seeing daily itself - used to be the average net refining margin per barrel in a year

Just 1 USD/brl refining margin translates to EPS of 11.5 per qtr. Thats 46 cents per annum. At PE 10 already RM 4.60

HRC price only rose from RM 5 to RM 7 now, merely RM 2 while crack spread rose from 15 to 29 now (about 14 USD/brl)...


again,

we only need $ 13/brl margin near term for TP RM 24 with PE 5 or $ 11/brl super long term margin with TP RM 40 at PE 10


Posted by pang72 > May 14, 2022 10:08 AM | Report Abuse

RECORD DAY FOR CRACK..
HRC WILL OVER 7.33 NEXT WEEK LIAO

6 months payback period, any regional refiners (asean) will be willing to take over just to satisfy local demand..

Even our old friend SHELL retail in Malaysia will be willing to buy back the refinery at triple the market cap now..easily

These western companies (shell) better give up their ESG stand.


Posted by probability > May 13, 2022 8:49 PM | Report Abuse X

US refiners will take over HRC company lor...LOL! HRC limit up lor...

No matter what Saudi Arabia do to increase oil output...they can only make crude oil price come down, but refining margin will keep going higher......
people will be desperately buying as long as there are refiners willing to sell their refined products.....crude oil not refined is useless