The Caltex Australia Limited (ASX: CTX) share price has dropped lower on Thursday after releasing an update.
At the time of writing the fuel retailer's shares are down 1.5% to $27.13.
What did Caltex announce?
This morning Caltex became the latest company to reveal how the coronavirus outbreak was impacting its business.
According to the release, while at this stage Caltex has not seen clear impacts on demand in the Australian gasoline and diesel markets, it notes that jet fuel demand has been impacted by flight cancellations domestically and internationally.
And given the recent announcement by Qantas Airways Limited (ASX: QAN) in relation to capacity reductions, management suspects that demand may drop further in the coming weeks.
Positively, the company also revealed that its Convenience Retail business has benefited from stronger industry margin conditions, which has offset the earnings impact from lower volumes arising from the combination of bushfires, floods and weaker economic activity.
Though, it admitted that it is too early to tell how oil price falls and COVID-19 will impact this market.
Refiner margins update.
The company also released its Caltex Refiner Margin (CRM) update for the month of February.
During February the company recorded a CRM of US$4.14 per bbl, down from US$5.78 per bbl in January and US$7.34 per bbl in the prior corresponding period.
It also recorded just 505ML of CRM sales from production, which was down 8.3% since January.
Management blamed the narrowing CRM in February on the continuation of higher landed crude oil premiums, which were caused by the transition to the new IMO 2020 fuel specifications, and lower refiner margins impacted by global demand.
Unfortunately, management doesn't appear confident that things will improve quickly.
It notes that its crude purchases for March and April were committed during the periods of higher sweet crude oil premiums, which means landed crude oil premiums are expected to remain elevated through these two months.
Combined with lower demand because of the coronavirus outbreak, management believes there is a risk that refiner margins could continue to come under pressure.
