A seasonal splurge has helped lift Asia's crimped gasoline refining profits out of a long slump, but higher crude prices and the rise of energy-efficient cars are set to leave margins stuck at historically weak levels, industry watchers say.
Asia's gasoline margin, or 'crack', stood at nearly $9.60 barrels per day (bpd) on May 25, well above the 20-month low of $5.42 a barrel on April 19. Traders say the surge since late April has been triggered by strong demand.
Firms like Indonesia's Pertamina, Asia's top gasoline importer, have led the charge, buying actively ahead of the Ramadan fasting month, which this year goes from May 17 to June 14. InIndia, meanwhile, Bharat Petroleum has beefed up imports in recent weeks to meet an uptick in demand.
But analysts warn a creeping slowdown in Asia may be in store.
"Looking just at Asia, we see demand growth (for 2018) at 157,000 bpd year-on-year (up 2 percent), down marginally from the 160,000 bpd growth we had at the beginning of May," said Michael Dei-Michei, head of research at consultancy JBC Energy.
This also shows in profits. Seasonally adjusted and despite the recent increases, Singapore's gasoline cracks have spent most of the year at or near five-year lows.