In April, China's gasoline and diesel market trends declined

April 29th, News

According to the commodity market analysis system, the prices of gasoline and diesel from Shandong independent refineries declined in April. By the end of the month, the price of China's 92# gasoline was 7,983 CNY/ton, a decrease of 15.87% in April; the price of China's 0# diesel was 7,268.14 CNY/ton, a decrease of 12.59% in April.

Core Driver: International crude oil prices declined in early to mid-April

In the first half of April, crude oil prices fell, mainly due to a rapid shift from the previous geopolitical conflict premium to expectations of negotiation easing and bearish fundamentals. With the signals of renewed U.S.-Iran talks, partial resumption of navigation in the Strait of Hormuz, IEA's downward revision of supply and demand expectations, and a sharp increase in API inventories, the risk premium that had been built into oil prices began to dissipate, leading to a decline in crude oil prices. Additionally, global weak demand and concerns that escalating geopolitical conflicts could drag down the economy and oil consumption further pressured the crude oil market lower. In late April, as negotiations did not go smoothly, the crude oil market turned upward, but the Chinese refined oil market saw a significant decline overall in April.

China Supply Side: Refinery Resumption + Inventory Accumulation

In April, Chinese refineries resumed production in a concentrated manner, maintaining high processing volumes and increasing refined oil production. The operating rate of Shandong independent refineries remained around 60%, ensuring a sufficient supply of refined oil products in China. Additionally, with the continuous rise in gasoline and diesel inventories in China, the inventory levels of Shandong independent refineries and major players reached relatively high levels by mid-April, forcing prices to fall.

Market Demand: Demand Continues to Be Weak, Merchants Procure Cautiously

In April, demand for gasoline in private cars remained stable with no significant growth; new-energy vehicles continued to gain ground, squeezing gasoline consumption. The recovery in industries, infrastructure development, and logistics fell short of expectations, resulting in low project commencement rates and weak diesel demand, putting downward pressure on refinery shipments. Traders and gas stations lack confidence in the future market, mostly purchasing only as needed to avoid the risk of high inventory levels. As a result, market transactions have been sluggish, and gasoline and diesel prices have declined accordingly.

Market Outlook: Pay close attention to negotiations on geopolitical tensions in the Middle East. Shipping through the Strait of Hormuz remains stalled at present. If the Middle Eastern conflict persists for an extended period, it will not only drive oil prices higher but also intensify global inflationary pressures, thereby weighing on global economic growth. In the short term, crude oil prices are expected to experience broad fluctuations. From China’s perspective, refinery operating rates are unlikely to change significantly in the near term, and supply of refined petroleum products remains stable. We anticipate that gasoline and diesel prices will continue to fluctuate in the short term.