Thai diesel price cuts squeeze refinery margins and cloud investment outlook
A B2-per-litre reduction in ex-refinery diesel prices, effective from Apr 9, has already shaved about US$4 per barrel off gross refining margins (GRM). A further cut set to take effect could deepen the squeeze on…
Thai refineries are under pressure after a B2-per-litre reduction in ex-refinery diesel prices, effective April 9, shaved about US$4 per barrel off gross refining margins, according to CLSA research. April margins now stand at US$15-18 per barrel, a steep drop from the US$30-40 highs seen during recent geopolitical tensions, with further cuts expected to deepen the squeeze. The policy shift is impacting refinery earnings and share prices, analysts said, with implications for operators in Phuket and across Thailand.
Margin Compression and Financial Impact
A further diesel price cut of B3 per litre could erase most of the excess profits Thai refiners made during the Middle East conflict, CLSA said. Before the conflict, gross refining margins averaged US$6-8 per barrel.
Elevated costs for crude, insurance, and freight are compounding the challenge, as these expenses are not fully reflected in the reported margins. The research notes that this cost pressure is likely to persist.
Investment Uncertainty and Company Performance
Uncertainty over government pricing policy is weighing on long-term investment plans. PTT is currently seeking partners for its refining and petrochemical businesses, but analysts warn that unclear pricing rules could deter investors and delay deals.
PTT Global Chemical (PTTGC) is forecast to post a B2.1-billion profit in the first quarter of 2026, after a B5.5-billion loss in the previous quarter. However, hedging losses estimated at US$250 million are offsetting some gains, while global supply disruptions may support petrochemical prices in the coming months.
Source: https://www.thephuketnews.com/thai-refineries-squeezed-by-diesel-price-controls-100014.php
