Widening paraxylene spreads stemming from firm demand and reduced supply are forecast to help Korean oil refineries and petrochemicals firms rack up decent earnings this year following last year's stellar performance, industry sources said Friday.

According to the sources, PX spreads stood at $382.96 per ton this month. PX spreads dipped to below $300 per ton in 2014 due to a supply increase amid sluggish demand, after staying between $500 and $700 per ton in the early 2010s. 

PX spreads have been widening since late last year, reaching $418.98 per ton in February, $426.55 per ton in March and $408.63 per ton in April. The break-even point for local refiners is estimated at some $250 per ton. Paraxylene, derived from crude oil, is a raw material in producing polyester, widely used for clothes.

The recent surge in PX spreads is caused by some foreign companies suspending their production facilities for maintenance and technical glitches. No. 1 oil refiner SK Innovation Co. and its affiliates have a total PX capacity of over 3 million tons, followed by S-Oil Corp. with 1.8 million tons, Hanhwa Total Co. with 1.7 million tons, GS Caltex Corp. with 1.35 million tons and Hyundai Oilbank Co. with 1.18 million tons, sources said.

The sources said PX spreads will increase down the road as demand for polyester is expected to remain strong. "Supply of paraxylene in China, the world's largest buyer, is declining, while demand is rising, which will widen PX spreads," said Noh Woo-ho, an analyst at Meritz Securities.

Last year, despite global oil prices hitting a multiyear low due to a supply glut, local oil refiners pocketed satisfactory earnings on the back of improved cracking margins.

The country's four major oil refiners -- SK Innovation, GS Caltex, S-Oil and Hyundai Oilbank -- logged a combined operating income of 4.79 trillion won ($3.99 billion) last year, which presents a four-year high and marks a sharp turnaround from the previous year's almost 1 trillion-won operating loss. (Yonhap)