HPCL refining margin to fall this fiscal: Fitch Ratings

MUMBAI : Fitch Ratings on Monday said it expects gross refining margins of state-run Hindustan Petroleum Corp Ltd (HPCL) to fall by one-third during the current fiscal due to volatility in crude prices which could lead to inventory losses.

“Fitch expects HPCL’s standalone gross refining margins (GRM) to fall to $3.2 a barrel in FY20 from $5.0 a barrel in FY19. GRMs for HPCL’s refining segment fell to $1.9 per barrel during 1HFY20,” the statement said, adding that this was in line with the industry due to strong new supply from China, volatility in crude prices leading to inventory losses, and unfavorable movement in the light-heavy crude spreads.

However, Fitch expects the GRMs to gradually improve from 2HFY20, benefiting from strong diesel spreads, driven by new global marine-fuel regulations.