【SCI View】Independent Refinery Gasoline Arbitrage Profit Grew

Shandong Independent Refinery Gasoline Cross Regional Arbitrage Profit Exceeded Diesel

Due to the refined oil peak season from September to October, the recent prices of gasoline and diesel trended up. In terms of gasoline, the prices of gasoline blending components such as alkylate, MTBE and mixed aromatics stayed at highs. Meanwhile, from Q3, 2019, many refineries raised their diesel/gasoline output ratios, and China’s government promoted the exports of gasoline. Therefore, the gasoline supply dropped to some extent. Moreover, in September, the state-owned refineries’ gasoline purchases from independent refineries improved, supporting the gasoline prices. As for diesel, with the end of the fishing off season, the demand for diesel increased, and the agricultural harvests also supported the diesel demand. On September 14, two crude oil facilities at Saudi Arabian Oil Company were attacked by unmanned aerial vehicles, and the daily crude oil output in Saudi Arabia dropped by 5,700 thousand barrels, accounting for around 6% of the global crude oil daily output. Therefore, the international crude oil prices surged on September 16, and the prices of gasoline and diesel at China’s independent refineries increased dramatically as well. Therein, the largest daily price increase of gasoline at independent refineries was around RMB 410/mt, while the largest daily price increase of diesel was around RMB 400/mt.

According to SCI’s statistics, up to September 19, the average 92Ron gasoline price at Shandong independent refineries was RMB 7,152/mt, up RMB 496/mt from the beginning of September, while the average 0# diesel price at Shandong independent refineries was RMB 6,712/mt, up RMB 234/mt.

In terms of state-owned refineries, recently, the prices of gasoline at state-owned refineries increased by around RMB 600-800/mt, and the prices of diesel increased by about RMB 50-200/mt.

According to the table above, the arbitrage profits of gasoline and diesel from Shandong independent refineries to many other regions performed well. In terms of gasoline, the arbitrage window of gasoline from Shandong independent refineries to most other regions except Shanghai, Xi’an, Harbin, Hefei and Changchun stayed open. As for diesel, the arbitrage profits of diesel from Shandong independent refineries to Beijing, Tianjin, Shijiazhuang, Taiyuan, etc. stayed positive, and the arbitrage profits of diesel from Shandong independent refineries to Fuzhou, Nanning and Guangzhou by sea even exceeded RMB 200/mt. Meanwhile, the diesel arbitrage window from Shandong independent refineries to other regions closed. On the whole the gasoline arbitrage profits performed better than diesel arbitrage profits.

In the future, the international crude oil prices are likely to trend up. In China, with the approaching of the National Day holiday, many downstream users may replenish their inventory, and the sales of gasoline and diesel will improve. Accordingly, the future prices of gasoline and diesel may grow. In terms of arbitrage profits, currently, the prices of gasoline and diesel at state-owned refineries stay at high levels. Therefore, SCI reckons that the future arbitrage window of gasoline and diesel from Shandong independent refineries to many other regions may stay open for a short period.

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