* May profits more than $3/bbl lower than 10-yr average - data
* Naphtha, gasoline drag down refiners' profits
* SK Energy, Singapore's SRC plan to trim output - sources
* Japan gasoline margins remain strong - sources (Adds industry context, details)
By Florence Tan and Seng Li Peng
SINGAPORE, May 23 (Reuters) - Asia's oil refiners are considering reducing output after margins slumped to their lowest for the season since 2003, according to industry sources and Refinitiv data.
Companies that planned to trim output include SK Energy, a unit of SK Innovation, the Singapore Refinery Company (SRC), owned by PetroChina and Chevron Corp and at least one refiner in Thailand, five people familiar with the matter said.
In China, independent refiners known as 'teapots', which account for about a fifth of the country's crude imports, operated at below 50% of capacity on average in April through May, versus 64% in the first quarter, said Zang Wengang, an analyst with Sublime Information Co.
A spokeswoman for SK Innovation spokeswoman declined to comment, while SRC did not respond to a request for comment.
The people familiar with the matter declined to be identified because they are not authorised to speak to media.
Rising crude purchasing costs have hit refiners' bottom line. "We plan to lower (the operating rate) a bit...soon," one of the sources said.
Spot crude cargoes have sold at multi-year high premiums as U.S. sanctions on Iran and Venezuela reduced supplies for Asia while a crisis in Russia over contaminated crude boosted Brent prices.
Meanwhile excess supplies of light products, gasoline and petrochemical feedstock naphtha have squeezed margins further.
Margins at a refinery complex in Singapore are at their lowest for this time of the year since 2003, even narrower than lows seen in 2009's global financial crisis, Refinitiv data showed.
The profits are more than $3 a barrel lower than the average for the past decade since 2009. DUB-SIN-REF
Next month, Middle East producers led by top exporter Saudi Arabia are set to raise official selling prices (OSP) for a fourth straight month to track stronger spot markets.
Crude prices "are too high while product cracks (profit margins) are getting worse," another source from a north Asian refiner said, adding that refiners are cutting cost by buying cheaper straight-run fuel oil to process at secondary refining units.
"Aromatics margins are getting worse so refiners will try to optimise as much as possible," the person said, referring to profits for paraxylene, a petrochemical used to make textile and plastic bottles.
Asia's naphtha crack on Wednesday hit a six-month low at a discount of about $9 a barrel to Brent crude NAF-SIN-CRK, lower than that for fuel oil.
Asia's naphtha supply from the west had remained high despite lower demand caused by ongoing cracker maintenance, outages at plants in Taiwan and Japan and an extended shutdown at a naphtha cracker in South Korea.
Still, margins may begin to improve. About 24% of Japan's refining capacity will be shut for maintenance by early June while state-run Indian refiners have already made plans to shut down units for upgrade, and Reliance Industries plans to halve crude runs at a 660,000 bpd refinery that serves domestic markets.
Domestic margins in Japan have remained strong with gasoline profits at $25 a barrel, said a Tokyo-based analyst who looks at Japanese refiners.
There could be better news for refiners in China, too.
"After suffering really bad margins for the first five months, China's independents will likely see margins recover in the third quarter on higher seasonal demand and as supplies tighten from much larger export quotas," said Sublime's Zang.
Analysts also expect a mandate to switch to low-sulphur fuel for ships from 2020, under new international rules introduced to protect the environment, to tighten diesel supplies, which could boost refining margins.
"Asian complex refiners are best positioned given their high sour crude ratio and mid-distillates yield," Citi analyst Oscar Yee said in a note. Gross refining margins could rise by $2 to $4 a barrel year-on-year in 2020, he said.
Refiners that could benefit includes Reliance, SK Innovation and S-Oil Corp, China's Sinopec and Hengli Petrochemical and Thai Oil PCL, Yee said.
Reporting by Aaron Sheldrick in TOKYO, Jane Chung in SEOUL, Nidhi Verma in NEW DELHI, and Chen Aizhu, Seng Li Peng, Jessica Jaganathan and Florence Tan in SINGAPORE Editing by Kenneth Maxwell