China Refined Oil Prices Continued Rising

Recently, China’s refined oil wholesale prices kept rising, but the retail profits continued to fluctuate within a narrow range. According to SCI’s statistics, up to May 22, the spread between wholesale price and retail price of 0# diesel at state-owned refineries was RMB 1,065/mt, down RMB 31/mt from May 11. Meanwhile, the spread between wholesale price and retail price of 92 Ron gasoline at state-owned refineries was RMB 1,581/mt, up RMB 10/mt from May 11. As China’s refined oil wholesale prices kept rising, the spread between wholesale price and retail price of refined oil hovered at lows. Although the price spread was fairish, the retail profits greatly declined. Given the lower wholesale prices at independent refineries, the operation profits at independent refineries were higher than those at state-owned refineries. Up to May 22, the spread between wholesale price and retail price of 0# diesel at Shandong independent refineries was RMB 1,330/mt, and that of 92 Ron gasoline at s Shandong independent refineries was RMB 2,080/mt.

At present, the international crude oil prices hover at highs, and it is predicted that they will further increase, giving support to the market sentiment. Besides, a lot of refineries will take overhauls in Q2, 2018, and the operating rates at some independent refineries will inch down. Therefore, China’s refined oil supply will dip to some extent. Furthermore, the demand for diesel is relatively stable, and that for gasoline will improve gradually with the temperature getting higher. On the whole, China’s refined oil prices will continue to grow, thus the spread between wholesale price and retail price will decrease somewhat in the short term.