PKN published utilization data of its refineries for the July 1 - August 31 period. According to the statement, the parent company processed 2.88 million tones of crude oil in the period, 15% more than a year ago. On the consolidated level (Unipetrol included) PKN processed 3.24 million tones, up 12.3% from the same period last year. Capacity utilization rate of the key Plock refinery stood at 105% versus 93% a year before.
Our view: Extremely beneficial margin environment in July forced PKN to process as many crude as it can, which led to the reported impressive throughput figures in the period. However, margins deteriorated sharply from mid August till mid September. This indicates lower throughput and utilization rate of the refineries for the last months of 3Q06. Since throughput grew faster (12.3%) than wholesale volume (5.6%) it indicates that PKN had growing inventories of refined products in a falling fuel price environment. This lets us suspect significant inventory revaluation in 3Q06 – downwards. However, we consider the news on rising volumes as slightly positive.