Korean Oil Refiners

South Korean oil refiners face difficult times ahead, bruised by the region's economic trauma which has pummelled domestic demand and exports, analysts said yesterday. Despite low crude oil prices, the Korean won's devaluation and signs of price competition among refiners, profits are expected to be further squeezed, they said. (Reuters)

"Local demand has shrivelled up, and there is no export market for their products," said Bill Hunsaker, an energy analyst at ING-Baring Securities. Domestic demand has slumped amid a financial crisis which led to South Korea accepting a record IMF-led bail-out of nearly $60 billion in December to save the country from national default after its foreign exchange reserves plunged to dangerously low levels. Analysts said oil exports were also in trouble since Korean refiners sell a large portion of their exports to Asia, where demand has dropped since the onset of the Asian currency crisis. Despite the slump in demand from Asia, refiners may dump more products in the region as it remains to be the only strategy, said Lee Sang-koo, an oil analyst at Hyundai Securities.