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South Korean refining margins to remain firm this year as exports grow

Refining margins for South Korean refineries are expected to remain robust in 2013, as oil products like diesel fuel will continue to be in short supply in the key export markets of Europe and Australia, traders and analysts said.
Analyst Yeon-ju Park of Daewoo Securities, in his 2013 outlook, said that as non-viable facilities in Europe will continue to close due to financing difficulties, the remaining refineries will continue to operate at modest capacities this year, within the configuration that limits their production level of diesel fuel. In Australia, aging refineries that could not remain competitive have closed down, making the country a net importer of diesel fuel from Asia. Maintenance-related shutdown in the U.S., Europe and Japan will also have an impact on supply, despite lower demand due to the economic downturn. Furthermore, the ongoing cold spell in South Korea and Japan will further boost demand for kerosene and diesel fuel in the short term. Hence, growth for Korean refiners in the domestic and export market is expected. (January 7, 2013)