Refining margin (GRM)
Convert a refinery’s margin per barrel into rupee profit, and separate the core refining margin from the inventory gain or loss created by crude prices moving while stock is held.
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How to use this calculator
Each step names a control you will find on screen above.
- Crude processed
Annual throughput in million tonnes. It is converted to barrels at 7.33 barrels a tonne, a common average; the true figure depends on the crude grade.
- Core GRM and operating cost
The gross refining margin excluding inventory effects, and the refinery’s operating cost, both in dollars per barrel. Their difference is what the refinery keeps from refining.
- Rupees per dollar
Margins are earned in dollars and reported in rupees, so the exchange rate scales the result.
- Change in crude and inventory held
How far crude moved over the period, and how many days of throughput the refinery holds as stock. Their product creates the inventory gain or loss.
Worked example: A $10 rise in crude with a month of stock
A refinery processes 15 million tonnes a year at a core GRM of $8 and operating cost of $3 a barrel, with the rupee at ₹85. Crude rises $10 a barrel while it holds 30 days of stock.
What to enter
- Crude processed
- 15 million tonnes / yr
- Core GRM
- $8 / bbl
- Operating cost
- $3 / bbl
- Rupees per dollar
- ₹85
- Change in crude price
- $10 / bbl
- Inventory held
- 30 days of throughput
What it shows you
- Barrels a year
- 110.0 million
- Core refining EBITDA
- ₹4,673 Cr
- Inventory gain / loss
- ₹768 Cr
- Reported GRM
- $8.82 / bbl
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.