China Independent Refineries Enjoy High Refining Margins
In December, international crude oil futures remain at relatively high levels, and the feedstock cost at the independent refineries in Shandong Province stabilizes at RMB 2,800-2,870/mt. On products, state-owned oil companies raise their gasoline purchase volume from the independent refineries, and China’s gasoline export volume increases. Therefore, the independent refineries have smooth sales and are active to raise their gasoline wholesale prices. In early December, mainstream market prices of gasoline at independent refineries increased to RMB 5,666/mt. On diesel, the construction companies in southern China keep running at high operating rates before China’s Spring Festival holiday, which supports the diesel consumption. Shandong independent refineries’ diesel flow to southern China increases. In early December, mainstream market prices of diesel at Shandong independent refineries increased to RMB 5,010.mt. In addition, the market supply of propylene is tight, so the independent refineries in Shandong Province mostly have low propylene inventories. In early December, mainstream market prices of propylene at Shandong independent refineries increased to RMB 8,150/mt.
All in all, product sales at the independent refineries increase more than the feedstock cost growth, which pushes up the refineries’ complex refining margins. As of December 9, the average refining margin at Shandong independent refineries was RMB 431.2/mt, up RMB 284/mt from the beginning of the month.
