(177,1 CZK, 0,00%) has published an update of its model petchem and refining margins containing August data. According to the statement, the model refining margin increased sharply to US$ 2.5/bbl in August from US$ 1.0/bbl in July, which more than compensated for the narrowing Brent- Urals spread (US$ 0.6/bbl in August versus US$ 1.2/bbl in July). Petchem showed a mixed set of data, with model petchem margins on monomers and polymers at € 326/tonne in August (versus € 265/t in July) and € 232/tonne in August (versus € 275/t in July) respectively.
Our view:
While the recent developments suggest some signs of an improvement, we have little doubt that Unipetrol’s CCS EBIT will stay in the red for another quarter in 3Q11. Profitability in petchem is likely to be substantially weaker in 3Q11 versus 2Q11, while gains from the improving refining climate may be neutralized by the cyclical shutdown at the Litvinov refinery. The relatively feeble refining macro environment is in line with our expectation, although the potentially sustained weakness of the polymer margin could be a concern. However, market anecdotes suggest margins in both the monomer and polymer value chain started to reverse their losses in July-August.