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JYD China Petroleum Marketscan Weekly

  • February 2015
  • -
  • JYD Coal Industry Research Center
  • -
  • 7 pages

Market Overview

Main refineries eye great profits following price hike

Having been sparked by rebounding crude futures around the globe, China oil product prices ended downtrend and marked the first rise over the past six month. On February 10th, PetroChina lifted EXW prices of gasoline and diesel by CNY290/mt and CNY280/mt respectively. Meanwhile, PetroChina provided crude oil for internal plants with price slumping by CNY821/mt in February. Therefore, according to JYD, main refineries have gained rocketing gross profits at approximately CNY1,000/mt.

Global crude futures have kept crashing down in the second half of 2014, imposing negative impact on domestic crude settlement. Still lags existed in the drops of oil products, which narrowed profit margins of refining. However, in February 2015, internal settlement of PetroChina hit low at CNY2,439/mt, indicating a sharp decline in refining cost.

With good news surging into the market, global oil price bounced back rapidly in February this year, along with change rate reaching above zero. Accordingly, China’s National Development and Reform Commission hiked retail prices of oil prices on February 10th, which registered the first upturn since this year. Refineries of PetroChina and Sinopec followed to lift EXW prices of gasoline and diesel. As the February crude settlement was still in reduction, there lied great profits for refineries in processing.

Climb in China oil prices have spurred downstream users’ buying interest. Meanwhile, demand for stockpile soared ahead of the Spring Festival, China’s Lunar New Year. Faced with robust procurement, some refineries of PetroChina and Sinopec have already fulfilled sales target of the whole month. Quotations once posted to a high level considering tight supply.

Taken together, crude futures around the global are very likely to nudge up and push up domestic oil product prices. Therefore, PetroChina and Sinopec are expected to achieve great profits after half-year losses.

Oil product wholesaling go robust, retail margins narrow
Since late January, global crude futures have bounced back in spite of a few fluctuations. Correspondingly, wholesale prices of gasoline and diesel in China have been spurred to shoot up. Transaction went robust amid traders’ restocking before the Spring Festival, China’s Lunar New Year. According to JYD, China gasoline and diesel wholesale prices averaged CNY6,972/mt and CNY5,792/mt respectively by February 13th. However, as the Lunar New Year approaches, traders have started to stop operation for holiday, which will likely slacken market activity.
Having dropped continuously for half a year, global oil prices moved up gradually with change rate reaching above zero. Therefore, upturn of oil product retail prices after the Spring Festival seems inevitable. Demand for diesel will unlikely rebound as industries like mining and infrastructure will probably see few operations during the Lunar January. However, as PetroChina, Sinopec as well as teapots operate as normal, increasing pressure is likely to draw on inventory. As to gasoline, transportation during the Spring Festival will trigger demand to go strong and support prices to stay high accordingly.
In general, diesel and gasoline prices will likely keep high during the holiday but fail to experience big changes affected by stockpiles bought previously. When it comes to gas station, sales of gasoline will further go lifted while that of diesel is to slacken sharply with thin profit margins lasting for a long time.

Table Of Contents

JYD China Petroleum Marketscan Weekly
Market Overview 1
Price Trend 2
Bunker Market 2
Market Forcast 4
News and Commentary 6
NDRC approves constructing crude terminal at Yantai Port 6
Oil products go lifted, some refineries register single-day increase of CNY700/mt 6
Shandong teapots' run rate slid sharply amid negative sentiment 6
Oil blending traders benefit from boosting bunker price 7
Crude gained as supply and demand improved 7
Demand for clean energy remains strong in Asia Pacific 7

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