Asian refiners EBITDA will decline by around 30% says Moody’s

Moody’s Investors Service says in a new report that the aggregate EBITDA of Asian refiners will decline by around 30%

  • Aggregate EBITDA will decline around 30% in 2020 on steep inventory losses and weak margins
  • A gradual economic recovery will improve margins in 2021, but risks are tilted to the downside

“EBITDA and margin will improve in 2021 as a gradual economic recovery results in higher refining margins and the absence of inventory losses leads to higher earnings. But risks to margin recovery are firmly tilted to the downside.”

Hui Ting Sim, a Moody’s Analyst.

“Margin recovery will be delayed if a resurgence in infections leads to renewed lockdowns. We’re also seeing higher market imbalance, with a surge in refining capacity continuing through 2022 driven by investments in Asia and the Middle East, which will further weigh on the extent of margin recovery,” adds Sim.

Among rated Asian refiners, some are better positioned than others to withstand weaker-than-expected refining margins. Moody’s expects ENEOS will be best positioned to maintain its credit quality, whereas HPCL-Mittal Energy Limited (HMEL, Ba2 negative), Thai Oil Public Company Limited (Baa2 negative) and SK Innovation Co. Ltd. (SKI, Baa2 negative) have lower buffers.

Most rated Asian refiners have close links with their respective government or have strong shareholders, hence their refinancing risk is low. Moody’s expects them to maintain strong access to funding given their good relationships with banks or track record of access to capital markets.

Moody’s report covers the nine refining and marketing companies across the region:

Bharat Petroleum Corporation Limited (BPCL, Baa3 negative)

ENEOS Holdings, Inc. (Baa2 stable)

GS Caltex Corporation (Baa1 stable)

Hindustan Petroleum Corporation Ltd. (HPCL, Baa3 negative)

HPCL-Mittal Energy Limited (HMEL, Ba2 negative)

Indian Oil Corporation Ltd (IOCL, Baa3 negative)

S-OIL Corporation (Baa2 stable)

SK Innovation Co. Ltd. (SKI, Baa2 negative)

Thai Oil Public Company Limited (Baa2 negative)

Subscribers can access the report “Refining & marketing – Asia: Coronavirus will exacerbate oversupply and keep refining margins weak” at:

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