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1、Deutsche Bank Markets Research Asia Energy Oil US$ 112.5; US$ 113.25; US$ 110 and US$ 110 / bbl, respectfully. We show China adding 32.6 mm tons (+39%) of new CDU capacity 2013 vs. 23.5 mm tons in 2012. Japans growing demand for oil in 2012 should revert to declining demand 2013-14 as the government
2、 reactivates its nuclear power plants. We suspect the government will begin to turn on the countrys nuclear generators (2H13), after the upcoming elections. Despite growing anticipation for improving global growth (Figure 3), we see only a modest pickup in Asia refining utilization rates (Figure 1)
3、for 2013 (82.2%) relative to 2012 (81.1%). As a result, we anticipate only a modest uptick in the Sing Complex Refining margin 2013/2012. The new normal (US$ 7.00 / bbl): We had an interesting conversation with Essars top management during mid- 2012. We remember the “Golden Age” of refining (2004-08
4、) when refining margins and oil prices surged. We remember US$ 7.45 / bbl Sing complex margins in 2004 on a Brent oil price of US$ 38/ bbl. Notwithstanding a 2.9x increase in the average price of Brent crude since 2004, the Sing complex refining margin has treaded water in the US$ 7.0 to 8.0 / bbl r
5、ange (Figure 1). The question to Essar was whether the US$ 7.08.0 / bbl Sing complex margin seen in 2004-2008 / 2011-12 is the new norm? Given higher taxes and higher environmental expenses (sulfur removal / Euro emission standards), Essars management thought US$ 7.0-8.0 / bbl represented a reasonab
6、le return for most complex refiners. Valuation and risks We use historical price-to-book values to determine where we stand in the Asian refining cycle and P/B to ROE to judge relative values among our Asian refiners. We also use DCF models to value our Asian refiners. Higher complexity deserves hig
7、her multiples. Taiwan multiples are traditionally higher than other Asian markets given the retail investor base. Looking full-cycle, we see Asian refinery PB valuations trough to peak of roughly 0.7x to 3.7x. Risks are ever-present when investing in refineries. The principal risks for the industry
8、are: 1) higher/lower-than-anticipated oil prices; 2) higher/lowerthan- anticipated regional product demand; 3) one-off shocks such as fires and/or earthquakes and 4) local product policies such as taxes and competition. 10 January 2013 Asia Refining Model Page 2 Deutsche Bank AG/Hong Kong Analyzing
9、Figures 1-41 We publish this model and reset our Singapore complex refining margins 2x/year, in January and July. In January 2012 we shifted our Asia and product demand function away from the EIA and BP Statistical Review data to locally reported, country by country, government sourced, demand data.
10、 The downward shift in our aggregate product demand function (and utilization rates) was meaningful, and as a result, we spent some time with the EIA attempting to reconcile the numbers. In conclusion, we suspect that: 1) the EIA product demand numbers for Asia which are similar to those published i
11、n the BP Statistical Review, are overstated; 2) the government-reported data that we publish in this report is understated; and 3) the real demand function for oil products in Asia lies somewhere between the local reporting agencies and the international reporting agencies. In Asia, we have stuck wi
12、th the country-by-country product demand data as reported by government agencies as it provides more granularities in terms of product than the international agencies. When we first started compiling and publishing China oil and product demand data (2004), we noticed that the China Bureau of Statist
13、ics reported demand for gasoline, diesel, fuel oil, kerosene, LPG and naphtha. The EIA confirmed and we agree that many Asian countries do not report bottom-of-the-barrel products such as lubes, wax, asphalt and coke. As a result, government demand data in Asia tends to understate full demand for oi
14、l products. On the other hand, the EIA in reporting Asia oil product demand: 1) does not report naphtha for any Asian country and 2) estimates an “Other” product line against oil demand. In China, for example, oil demand includes crude that is going to the Strategic Petroleum Reserve. Asian governme
15、nts understate the EIA and seemingly BP Statistical Review overstate oil product demand and there is not much we can do about it. What we are looking for, however, is not necessarily the nominal level of refining utilization in Asia, rather the trend of utilization rates. Figure 1 is our summary sup
16、ply-demand model for CDU refining capacity in Asia. Figure 2 is our previous (July 2012) summary supply-demand model for CDU refining capacity in Asia. CDU capacity numbers generally do not move around much as there is an ample 3-to-5-year construction period involved in adding capacity. However, no
17、t all refineries are publically listed which makes data collection more difficult, while in China there is a large grey market of refineries (tea pot refineries) generally owned / managed by provincial governments, but not officially recognized by the central government. Demand is more difficult to
18、quantify as noted above in our discussion about local reporting vs. international agency reporting of product demand. Aside from one-off shocks fires, tsunamis, earthquakes, etc. we suspect that demand, rather than supply is where most get it wrong. From Figure 1, we can say that the product pricing
19、 power passes from consumers to industry when utilization rates rise above 80%. When we try to forecast Sing complex refining margins for 2012-15e, utilization rates in Asia seem to be calling for moderately higher Sing complex margins. The slight reduction in Asian refining utilization rates from 2
20、011 into 2012 is principally the result of Japanese capacity coming back online (Figures 6, 13 and 20) after the Fukushima earthquake / tsunami, April 2011. Additional takeaway points from Figures 1 and 2 are: 1) the drop-off in oil product demand 2001 vs. 2000 (Figure 1) is the shift in our source
21、for product demand data from the international agencies to local reporting agencies, and 2) the argument of higher/lower oil prices leading to higher/lower refining margins seems to have held true for 2009-11; however, it was far from the truth in 2005, 2006 and 2008, when (average) Reporting differ
22、ences Its the utilization trend that counts most Supply is easy demand difficult Pricing power at 80% utilization Oil prices and refining margins dont always move in the same direction Reporting differences Its the utilization trend that counts most Supply is easy demand difficult Pricing power at 8
23、0% utilization Oil prices and refining margins dont always move in the same direction 10 January 2013 Asia Refining Model Deutsche Bank AG/Hong Kong Page 3 oil prices rose but (average) Sing margins fell year-on-year. During periods when oil prices and Sing margins were running hand-in-hand in simil
24、ar directions, the refining margin tended to run harder by 2-2.5x than the oil price. We assume that 1) Shell Oil (Australia) will shut down its Clyde refinery (86k bpd) in 2013e as reported; 2) Caltex (Australia) will shut down its Kurnell refinery as reported (130k bpd) in 2015 (Figures 6 and 3) F
25、ormosa (Taiwan) will shut down its Kaohsiung (220k bpd) in 2015e as reported (Figures 6 and 26). The refiners in Japan are all shutting down capacity ahead of the new upgrading requirements which take effect 2014. We continue to see China and India supplying Asias refining capacity (Figures 6, 13, 1
26、4-19 and Sinopec Group and Saudi Aramco signed a JV agreement on 15 January to build a refinery on the west coast of Saudi Arabia. We suspect that Chinas oil imports from Saudi will be rising in the near future. How do we view Asia imports of refined products from the Middle East? We do not think th
27、at much Middle Eastern production makes it past Sri Lanka. The export refineries in the Middle East export principally to Europe via the Red Sea and into the Mediterranean. The exception is the Rabigh refinery, which is 37.5% owned by Sumitomo, which in turn takes much of the products (particularly
28、naphtha) into Japan. Ribigh is located on the Red Sea, has CDU capacity of 20 mm tons (400k bpd) and has a very high (18%) naphtha yield. As per our discussions with Essars management in mid- 2012, very little refined product from the Middle East makes it into Asia: 1) most is consumed / exported ar
29、ound the region; 2) much has recently (2009) been integrated into naphtha crackers for chemical production; 3) some product is exported to Europe; and 5) a small amount is exported to Japan. Since 2003, we have not heard any of the Chinese SOEs formally comment on Chinas teapot refineries. It is sor
30、t of a taboo discussion point. Government restrictions on crude oil imports have always played into the hands of strangling the teapots in order for SOEs to dominate the domestic refining space. PetroChinas Mr. Mao Zefung, Deputy Secretary to the Board, spoke recently at DBs Access China Conference
31、(January 2012). In his presentation, Mr. Mao rejected the notion of oil product shortages in China as frequently reported by the press. Mr Mao suggested that there was excess capacity in the system, given 40m-100m tons of teapot refining capacity that is underutilized at any point in time. Putting i
32、t into context, 40m-100m tons of additional capacity would add 800k to 2,000k bpd of product to a system that consumes 8,000-9,000k bpd. Shutting down capacity The tea pots Chinas excess capacity Middle East politics Asia is an island limited imports Chinas excess capacity Shutting down capacity The
33、 tea pots Chinas excess capacity Middle East politics Asia is an island limited imports Chinas excess capacity Asia Refining Model 10 January 2013 Page 4 Deutsche Bank AG/Hong Kong Figure 1: Asia Refining : Supply - Demand Summary; / DB Estimates Singapore Complex Margins (2013-15E) January 2013Janu
34、ary 2013 Asia Refining : Utilization Rates vs Sing Margins200020012002200320042005200620072008 Oil Product Demand (000 bpd)19,91517,37518,09818,74619,75420,11120,55321,29621,523 - Y/y growth 4.2%3.6%5.4%1.8%2.2%3.6%1.1% Oil Refining (CDU) Capacity (000 bpd)22,20922,63822,94823,33923,49724,07224,7492
35、5,38626,208 - Y/y growth 1.4%1.7%0.7%2.4%2.8%2.6%3.2% - Excess / (Deficit) Refining Capacity2,2945,2634,8504,5933,7433,9614,1964,0904,684 - Reserve Capacity (% of Total)10.3%23.2%21.1%19.7%15.9%16.5%17.0%16.1%17.9% - Capacity Utilization89.7%76.8%78.9%80.3%84.1%83.5%83.0%83.9%82.1% Sing Complex Rf M
36、argin (US$ / bbl)3.592.332.013.957.456.925.657.717.59 Avg Brent Oil Price (US$ / bbl) 28.524.425.028.938.354.565.472.797.7 - Change in price oil ( % ) -14.3%2.5%15.4%32.7%42.2%20.0%11.1%34.4% - Change in Capacity Utilization ( % ) -14.4%2.8%1.8%4.7%-0.6%-0.6%1.0%-2.1% - Change in Singapore Complex M
37、argin ( % ) -35.1%-13.8%96.8%88.4%-7.0%-18.4%36.6%-1.6% Asia Refining - DB Forecasts200720082009201020112012F2013F2014F2015F Oil Product Demand (000 bpd)21,29621,52321,87223,26323,35424,07224,71425,53826,421 1.1%1.6%6.4%0.4%3.1%2.7%3.3%3.5% Oil Refining (CDU) Capacity (000 bpd)25,38626,20828,16029,1
38、7528,66729,69630,07030,89530,848 3.2%7.5%3.6%-1.7%3.6%1.3%2.7%-0.1% - Excess / (Deficit) Refining Capacity4,0904,6846,2885,9125,3125,6245,3565,3564,428 - Reserve Capacity (% of Total)16.1%17.9%22.3%20.3%18.5%18.9%17.8%17.3%14.4% - Capacity Utilization83.9%82.1%77.7%79.7%81.5%81.1%82.2%82.7%85.6% DB
39、Estimates - Sing Complex Rf Margins (US$ / bbl)7.71 7.59 2.98 4.68 7.66 7.31 7.48 7.65 8.00 Q16.55 8.00 4.37 4.78 7.07 7.34 7.50 7.60 8.00 Q29.55 10.97 2.98 4.27 8.07 6.73 7.70 8.00 8.50 Q36.65 7.46 3.19 4.69 8.51 8.81 7.40 7.60 7.80 Q48.10 3.92 1.51 4.98 7.00 6.36 7.30 7.40 7.70 DB Brent Oil Price
40、Estimates (US$ / bbl)72.797.762.780.3111.1112.0112.5113.3110.0 - Change in price oil ( % ) 11.1%34.4%-35.8%28.2%38.2%0.9%0.4%0.7%-2.9% - Change in Capacity Utilization ( % ) 1.0%-2.1%-5.4%2.7%2.2%-0.5%1.4%0.6%3.6% - Change in Singapore Complex Margin ( % ) 36.6%-1.6%-60.7%56.8%63.7%-4.6%2.2%2.3%4.6%
41、 Source: Deutsche Bank, Oil / DB Estimates Singapore Complex Margins (2012-15E) July 2012July 2012 Asia Refining : Utilization Rates vs Sing Margins200020012002200320042005200620072008 Oil Product Demand (000 bpd)19,73917,19117,90618,54519,52719,88020,33221,04621,285 - Y/y growth 4.2%3.6%5.3%1.8%2.3
42、%3.5%1.1% Oil Refining (CDU) Capacity (000 bpd)22,20922,63822,94323,32923,45824,03224,70725,34426,160 - Y/y growth 1.3%1.7%0.5%2.4%2.8%2.6%3.2% - Excess / (Deficit) Refining Capacity2,4715,4475,0374,7843,9304,1524,3744,2984,875 - Reserve Capacity (% of Total)11.1%24.1%22.0%20.5%16.8%17.3%17.7%17.0%1
43、8.6% - Capacity Utilization88.9%75.9%78.0%79.5%83.2%82.7%82.3%83.0%81.4% Sing Complex Rf Margin (US$ / bbl)3.592.332.013.957.456.925.657.717.59 Avg Brent Oil Price (US$ / bbl) 28.524.425.028.938.354.565.472.797.7 - Change in price oil ( % ) -14.3%2.5%15.4%32.7%42.2%20.0%11.1%34.4% - Change in Capaci
44、ty Utilization ( % ) -14.6%2.8%1.9%4.7%-0.6%-0.5%0.9%-2.0% - Change in Singapore Complex Margin ( % ) -35.1%-13.8%96.8%88.4%-7.0%-18.4%36.6%-1.6% Asia Refining - DB Forecasts200720082009201020112012F2013F2014F2015F Oil Product Demand (000 bpd)21,04621,28521,39422,67923,40024,00524,75225,59726,520 1.
45、1%0.5%6.0%3.2%2.6%3.1%3.4%3.6% Oil Refining (CDU) Capacity (000 bpd)25,34426,16028,15329,10028,59229,51229,72230,46630,547 3.2%7.6%3.4%-1.7%3.2%0.7%2.5%0.3% - Excess / (Deficit) Refining Capacity4,2984,8756,7596,4225,1925,5064,9704,8694,028 - Reserve Capacity (% of Total)17.0%18.6%24.0%22.1%18.2%18.
46、7%16.7%16.0%13.2% - Capacity Utilization83.0%81.4%76.0%77.9%81.8%81.3%83.3%84.0%86.8% DB Estimates - Sing Complex Rf Margins (US$ / bbl)7.71 7.59 3.01 4.68 7.66 7.20 7.48 7.81 8.00 Q16.55 8.00 4.37 4.78 7.07 7.34 7.50 7.75 8.00 Q29.55 10.97 2.98 4.27 8.07 6.73 7.70 8.20 8.50 Q36.65 7.46 3.19 4.69 8.
47、51 7.46 7.40 7.70 7.80 Q48.10 3.92 1.51 4.98 7.00 7.25 7.30 7.60 7.70 DB Brent Oil Price Estimates (US$ / bbl)72.797.762.780.3111.1106.6104.0110.0110.0 - Change in price oil ( % ) 11.1%34.4%-35.8%28.1%38.3%-4.0%-2.4%5.8%0.0% - Change in Capacity Utilization ( % ) 0.9%-2.0%-6.6%2.6%5.0%-0.6%2.4%0.9%3
48、.3% - Change in Singapore Complex Margin ( % ) 36.6%-1.6%-60.3%55.4%63.7%-6.1%3.9%4.5%2.4% Source: Deutsche Bank, Oil Blue - most recent adjustment has been up. Asia Refining Model 10 January 2013 Deutsche Bank AG/Hong Kong Page 7 Figure 4: Singapore Complex Margins Quarterly Trends 6.20 7.33 6.61 5.19 - 2.00 4.00 6.00 8.00 10.00 12.00 1Q2Q3Q4Q US$/bbl 200520062007200820092010201120