Refining & Chemicals - Asia Pacific: Expect solid 2Q for Korea refining/ chemical companies

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Refining & Chemicals - Asia Pacific: Expect solid 2Q for Korea refining/ chemical companies

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Refining & Chemicals - Asia Pacific

Expect solid 2Q for Korea refining/

chemical companies

Price Objective Change

GRM remains above US$20/bbl; Saudi cuts August OSP 09 July 2026

2Q26 Asia GRM rose 64% QoQ to US$35/bbl after Middle East tensions, with diesel and Equity

jet/kero cracks reaching US$61/bbl and US$67/bbl, up 51% and 48% QoQ, respectively. Asia Pacific

Notably, GRM remains at US$26/bbl in July’26, above the pre-war level of US$11/bbl in Refining & Chemicals

4Q25. Saudi Arabia also cut the August OSP for Arab Light crude to a US$1.50/bbl Sun Jung Lee >>

discount to the regional Oman/Dubai benchmark, down US$11.0/bbl MoM from Research Analyst

US$19.5/bbl, US$15.5/bbl, and US$9.5/bbl in May, June, and July, respectively, which Merrill+82 2 3707Lynch0538(Seoul)

should support earnings in 2H26. BofA commodities team expects crude oil to stabilize sunjung.lee@bofa.com

at US$70-80/bbl for most of 2H26, vs. US$94/bbl in 1H26, and remain around Taekyoung Ha >>

Research Analyst

US$70/bbl in 2027 (see report 'Oil gets the memo'). Merrill Lynch (Seoul)

taekyoung.ha@bofa.com

Petchem: 2Q beat but spread narrows; prefer KKPC

2Q26 ethylene-naphtha spread rose 45% QoQ to US$240/MT, mainly driven by a 31%

QoQ increase in ethylene prices vs. a 28% QoQ rise in naphtha prices, which would Abbreviations

support solid 2Q for chemical companies. However, the spread fell to US$147/MT in GRM = gross refining margin

July’26, with ethylene and naphtha prices down 31% and 27%, respectively, from 2Q26, OSP = official selling price

remaining below the pre-war level of US$187/MT in 4Q25. We expect NCC names to NCC = naphtha cracking center