Shandong Independent Refined Oil Market to Falter Forward

Recently, the refined oil prices at Shandong independent refineries hovered at highs. In April, the international crude oil prices fluctuated upward, giving support to the market sentiment. Moreover, with the downstream demand for refined oil increasing, the sales at independent refineries improved. Supported by the increase in the demand for diesel, the diesel prices rose obviously. Up to the end of April, the average price of 92 Ron gasoline was RMB 6,968/mt, up RMB 39/mt or 0.57% M-O-M. Besides, the average price of 95 Ron gasoline reached RMB 7,155/mt, up RMB 17/mt or 0.24% M-O-M, and that of diesel was RMB 5,921/mt, up RMB 341/mt or 6.12% M-O-M.

As the refined oil prices at Shandong independent refineries grew quickly, those had reached high levels. But the trading activity started to decline. There still are many factors influencing the refined oil prices at Shandong independent refineries.

On the one hand, the operating rates at Shandong independent refineries will remain low in May due to plenty of overhauls, and the overall output of refined oil will inch down accordingly. Moreover, in response to the great increase in the international crude oil prices, the oil refining cost at Shandong independent refineries will grow, thus the overall profits will fall down to some extent. Therefore, some refineries will cut the operating rates moderately, so the refined oil output in Shandong will decline somewhat.

On the other hand, although the overall demand for refined oil will continue to improve, the refined oil supply remain surplus. Thus, the increase in the refined oil prices at Shandong independent refineries will be limited.

On the whole, the refined oil prices at Shandong independent refineries will continue to grow, but the increase will be relatively limited due to the surplus supply and the severe market supervision.