MOSCOW (MRC) -- SK Innovation Co Ltd, the owner of South Korea's top refiner SK Energy, said on Friday refining margins are expected to gradually recover this year on a pick-up in fuel demand as the impact of COVID-19 eases, according to Reuters.
The company, which has been battered by weak margins during the global pandemic, posted an operating loss of 243 billion won (USD218 million) in the October-December quarter.
It was the fourth straight quarterly operating loss, and compared with an operating profit of 88 billion won for the year-ago period.
SK Innovation, which has a total refining capacity of 1.115 million barrels per day (bpd) at plants in Ulsan and Incheon, said it operated it facilities at 61% of capacity on average in the quarter, down from 79% a year earlier.
It flagged in October that the CDU utilization rate would fall in the fourth quarter from the third quarter's 72%.
The rate will be held at about 60-70% during the current quarter, a company official told Reuters.
Capital spending for 2021 was expected at about 4-4.5 trillion won this year, similar to last year's level, the company said.
About 70% of the funds have been earmarked for its small but growing battery and material related businesses. The battery business accounted for only about 6.5% of SK Innovation's total revenue during the quarter. The company said the business aims to turn a profit in 2022.
SK Innovation supplies electric car batteries to Volkswagen and Ford Motor Co among others, and said on Friday it plans to invest 1.3 trillion won at its battery unit in Hungary to build a third battery plant.
Construction will start in third quarter, with first production targetted for early 2024, it said in a regulatory filing.
Shares of SK Innovation were up 5.2% as of 0248 GMT, against the broader market KOSPI's 0.8% fall.
As MRC wrote before, SK Advanced is planning to start up the new polypropylene (PP) plant in Ulsan, South Korea this March 2021 as construction works are nearly completed. The PP unit is a joint venture between PolyMirae and SK Advanced, using the “Spheripol” process of LyondellBasell, and have an annual output of 400,000 tons/year. The unit will be utilizing the propylene output from SK’s 600,000 tons/year propane dehydrogenation (PDH) unit at the same complex. It is expected that SK Advanced would have a smaller propylene allocation for export once the new PP line comes online.
According to MRC's DataScope report, PP imports into Russia increased by 21% year on year to about 202,000 tonnes in the first eleven months of 2020. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.