Krungsri Securities (KSS) remains bullish on Thailand’s energy and petrochemical sector, maintaining its view that the refining segment will outperform in the second half of 2025.
Upstream Outlook: Crude Oil Steady to Lower
Dubai crude oil prices were stable week-on-week, showing better resilience compared to Brent and WTI, as Middle Eastern crude gained on expectations of heightened Russian energy sanctions. Nevertheless, KSS expects crude oil prices in September to trend lower month-on-month due to a lack of strong demand catalysts, even as OPEC+ output continues to rise in line with its production plans.
Refining Margins Benefit from Selective Tightness
Singapore refining margins edged up 1% week-on-week, supported by a 2-6% increase in gasoline, jet fuel, and gasoil spreads. These gains were attributed to tightening supply caused by unplanned refinery maintenance shutdowns.
Conversely, the LSFO spread dropped 39% week-on-week as increased fuel oil supply hit the market due to maintenance at several FCC refineries. KSS maintains its September outlook for Singapore refining margins to recover month-on-month, bolstered by European oil restocking demand and further upside from unexpected maintenance shutdowns in African refineries.
Petrochemicals Remain Under Pressure
Petrochemical spreads mostly continued to decline week-on-week, hampered by persistent feedstock price pressure. In the olefins chain, HDPE and PP spreads remained at low levels, prompting some operators to reduce production runs. PX prices in the aromatics chain fell by 2% while benzene remained stable. The integrated PET spread in the polyester chain also edged down 2%.
Despite these pressures, KSS holds to its view that petrochemical spreads will recover month-on-month in September, as supply tightens with more producers cutting operations, and potential restocking demand for olefins offers further support.
Weekly Summary and Stock Recommendations
Overall, energy prices, refining margins, and petrochemical spreads moved within tight ranges this week, with no standout performers. KSS continues to favor the refining sector for outperformance in the second half of 2025, expecting it to benefit from a recovery in refining margins due to EU restocking and an absence of major stock losses like those seen in the first half of the year.
Top sector picks remain PTG Energy (SET: PTG), which is forecast to see continued recovery in line with improving marketing margins, and Bangchak Corporation (SET: BCP), expected to benefit from fewer maintenance shutdowns in 2H25 as well as greater exposure to middle distillates compared to its peers. KSS sees recent political pressures in the market as a buying opportunity for investors looking to gain exposure to these names.
