Sales Reach 8.0485 Trillion KRW as Operating Profit Falls Due to Declining Oil Prices and Exchange Rates
Refining Margins Expected to Improve with Expanded U.S. Exports
Shaheen Project Progresses to 77.7% Completion, Targeting Next Year for Finalization
S-Oil recorded an operating loss of approximately 300 billion KRW in the second quarter of 2025, marking two consecutive quarters of poor performance. This was due to a decline in profitability in the refining sector, which resulted from falling oil prices and exchange rates. However, the company announced that a rebound in performance is expected in the third quarter, supported by the seasonal peak demand and a recovery in refining margins.
On July 25, S-Oil announced through a public disclosure that its consolidated sales for the second quarter of 2025 reached 8.0485 trillion KRW, with an operating loss of 344 billion KRW and a net loss of 66.8 billion KRW. This represents a shift to losses compared to the operating profit of 160.6 billion KRW recorded in the second quarter of the previous year. The poor performance in the refining sector, caused by declines in oil prices and exchange rates, is analyzed to have led to an overall deterioration in profitability.
Refining: Losses Widen Due to Weak International Oil Prices
In the second quarter, international oil prices showed a weak trend, repeatedly fluctuating sharply. This was due to the production increase policy of the Organization of the Petroleum Exporting Countries Plus (OPEC+), mutual tariff issues between the United States and China, and various geopolitical risks. In Asia, refining margins rebounded temporarily as supply decreased due to regular spring maintenance and operational disruptions at some refineries. However, this was insufficient to restore overall profitability.
S-Oil stated, "In the third quarter, we expect refining margins to continue improving, driven by seasonal demand increases during the summer driving season and tighter supply resulting from partial shutdowns and operational disruptions at U.S. refineries."
Aromatics Rebound in Petrochemicals... Lubricant Base Oil Demand Recovers
In the petrochemical sector, the aromatics and olefin product groups showed divergent trends. Paraxylene (PX) saw a rebound in spread as demand increased due to the operation of new purified terephthalic acid (PTA) facilities in China. In contrast, benzene experienced a narrowing of spreads as import demand declined because of U.S. tariff impositions.
The olefin product group showed partial recovery, supported by supply constraints due to regional regular maintenance and an easing of tensions between the United States and China. This stabilization trend is expected to continue in the second half of the year, aided by the resolution of tariff-related uncertainties.
The lubricant base oil segment also recovered to its usual spread levels, as raw material prices stabilized and industrial demand rebounded. S-Oil explained, "Given the limited expansion of new facilities, we expect to maintain profitability at average annual levels."
Ulsan Shaheen Project Progresses Smoothly at 77.7% Completion
S-Oil's large-scale petrochemical new business, the 'Shaheen Project,' is also proceeding without any setbacks. As of the end of July 2025, the overall progress rate has reached 77.7%. Specifically, design is at 96.9%, equipment procurement at 89.8%, and construction at 63.0% completion.
Most of the key facilities, including the main towers of the steam cracker, the TC2C (catalytic dehydrogenation) reactor, and the high-density and linear low-density polyethylene (HDPE and LLDPE) polymer reactors, have been installed. The company is now focusing on follow-up work, aiming for mechanical completion in the first half of next year.
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