European refiners: UBS sees low margins in 2021 and beyond

Motor Oil (Hellas) Corinth Refineries

18/09/2020 10:32

** UBS remains cautious on the European refining sector due
to depressed refining margins hit by the drop in global oil
demand caused by the COVID-19 pandemic
    ** The brokerage expects global margins to be down
year-on-year in 2020 and to only moderately recover in 2021 and
beyond due to persistent oversupply
    ** "The situation is particularly challenging for European
refiners which produce more middle distillates (~45% of the mix)
and are more impacted by the weak jet fuel demand and middle
distillates cracks," it adds
    ** UBS sees Finnish Neste  NESTE.HE  ("neutral") as the
least impacted by the situation as refining is now a very low
share of its profit mix
    ** The brokerage cuts its price targets for all stocks in
the sector except Neste, including Saras  SRS.MI , PKN Orlen
 PKN.WA , Motor Oil  MORr.AT , Hellenic Petroleum  HEPr.AT  and
Turkiye Petrol Rafinerileri (Tüpras)  TUPRS.IS 
    ** Its least favoured stock is Tüpras ("sell"), while Motor
Oil remains the only "buy" rated stock in its coverage

 ((milla.nissi@tr.com))