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Singapore Refining Co. (SRC) has reduced crude processing rates at its 285,000 barrels-per-day (bpd) refinery in a move which is set to have a knock-on effect on the local marine fuels market in Singapore.

Industry sources have said SRC plans to cut processing rates at its Pulau Merlimau facility by between 5 and 7 percent due to weaker refining margins in the Asian market, Reuters reports.

The SRC refinery is a joint venture between Singapore Petroleum Co (SPC) and Chevron Corporation.

SPC has storage space for bunker fuel both at the Pulau Merlimau refinery and at its own storage terminal for petroleum products at Pulau Sebarok, which it uses to support its marine bunker operations and trading and marketing activities. The 220,000 cubic metres terminal consists of 13 storage tanks and is equipped with a deepwater jetty.

Local traders have said more refineries in Asia may also reduce their crude run rates as they continue to face lower profit margins due to weaker demand for middle distillates.

ExxonMobil could cut production by 8 to 10 percent at its 605,000 barrels-per-day Jurong refinery, according to market sources. The company also uses output from its refinery for sale in the Singapore marine fuels market and is amongst the top 10 suppliers at the world's largest bunker port with a market share of approximately 8 percent.

Refiners in South Korea are also reducing their processing rates. Hyundai Oilbank looks set to be the first to cut crude runs as it is the smallest of the country's four refiners and the most sensitive to refining margins. Local sources say the company is likely to cut its rates to 300,000-310,000 barrels-per-day within the week, after raising them earlier this month.

In Thailand, Chainoi Puankosoom, President of PTT Aromatics and Refining (PTTAR) and spokesman for the country's refining industry, said Thai refiners are also considering cuts due to deteriorating margins.

Meanwhile, in Japan, refiners appear to be on course to continue at current rates following a drop in local gasoline stocks and as facilities return from or head into a period of maintenance. Cosmo Oil is currently operating at near full capacity ahead of refinery maintenance scheduled later this month, whilst Taiyo Oil is also processing crude at near the maximum rate having been offline in mid-July.