CGSI Positive on Thai Refiners, Strong Cracking Margins

Analyst
โดย HoonSmart·TH·Read original
Summary · why it matters

CGS International (Thailand) or CGSI stated in its analysis that it maintains a positive view on the Thai refining group. Although China is increasing exports of refined oil products, it is expected to be a gradual easing, as China prioritizes domestic energy security. Meanwhile, the Middle East conflict may delay the start of operations at the Huajin Aramco refinery to October-November 2026. Excluding the recovery in refining volumes during the US-Iran ceasefire in July 2026, global refining volumes are likely to decline by more than 2 million barrels per day in 2026. Additionally, Iranian and Houthi attacks have reduced refinery utilization rates in Saudi Arabia and Kuwait since March 2026, and Russian refineries have been attacked by drones, turning Russia into a net importer of diesel. Although surging diesel prices may cause demand destruction of about 330,000 barrels per day, the supply reduction of more than 1 million barrels per day supports Asian crack spreads. Tight heavy crude supply pressures heavy distillate production, and Russia's LSFO export ban helps keep crack spreads elevated. Thai refinery stocks have risen significantly and may face profit-taking, but CGSI views any pullback as an accumulation opportunity, especially for TOP, SPRC, and BCP, as strong GRM in the first half of 2026 will generate cash flow and support attractive dividends. However, it maintains a Neutral rating on the Thai oil and gas group due to concerns over downstream petrochemicals.

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