Krungsri Securities remains bullish on Thailand’s energy and petrochemical sector, citing strong recovery in petrochemical spreads despite ongoing volatility in the crude oil and refinery markets. The volatility is driven by market anticipation surrounding U.S.-Iran negotiations, which could unlock additional energy shipments via the Strait of Hormuz and relieve current supply tightness.
Upstream crude oil prices dropped 7-8% week-on-week as traders expect progress in U.S.-Iran talks to enable increased shipments, which would help ease global supply constraints. Krungsri Securities anticipates that crude prices in April 2026 will decrease month-on-month as alternative shipping channels open and Hormuz Strait restrictions diminish.
On the refinery side, Singapore Gross Refining Margin (SG GRM) contracted 16% week-on-week, mirroring a 14% decline in the gasoil spread. The market is reacting to prospects of improved supply from the anticipated U.S.-Iran deal and the strategic petroleum reserve releases in Japan and South Korea. However, Krungsri forecasts a GRM recovery in April as tight supply persists with ongoing disruptions through Hormuz.
Petrochemicals: Sharp Recovery on Lower Feedstock Costs
Petrochemical markets showed robust week-on-week recovery as prices remained steady amid continued tight supply, while input costs fell in line with crude oil prices. Notable gains include:
- Olefins chain: HDPE and PP spreads increased by 24-25% week-on-week.
- Aromatics: PX and BZ spreads surged by 54% and 260% respectively, albeit from a low base.
- Polyester chain (PET): The integrated spread rose 3% to USD 269 per ton week-on-week.
Krungsri maintains that the polyester segment will continue its recovery into April, supported by seasonally stronger demand.
Sector Picks and Outlook
Krungsri highlights that the petrochemical segment presents stronger positive catalysts, benefiting companies like PTTGC, SCC, and IRPC. The refinery segment continues to face pressure from regulatory challenges. Despite overall sector volatility, Krungsri remains bullish, with BCP, PTTGC, and IVL as their top picks, driven by promising prospects in petrochemicals.
The energy sector, meanwhile, remains sensitive to geopolitical developments, but petrochemicals have emerged as a bright spot due to declining feedstock costs and supply tightness.
