China Alkylated Oil Market to Be Tepid

Recently, the international crude oil prices rebounded, giving support to China’s alkylated oil market. Producers showed strong interest in operating, and the alkylated oil prices increased to some extent. According to SCI’s statistics, up to February 23, the average price of alkylated oil in Shandong reached RMB 6,246/mt, up RMB 175/m or 2.88% from the Spring Festival. Specifically speaking, as the international crude oil prices kept dipping before the Spring Festival, most market participants held bearish sentiment towards the alkylated oil market.

Most producers had lowered the inventory, and most alkylated oil resources were arranged for former contracts. However, most downstream users showed weak interest in operating, thus the trading activity in the alkylated oil market was relatively poor. During the Spring Festival holiday, the international crude oil prices rebounded, giving support to China’s alkylated oil market.

As the prices of feed gas grew, producers raised the offers of alkylated oil to some extent. Meanwhile, the trading atmosphere at the alkylated oil market cooled down. Producers cut the alkylated oil prices in order to stimulate the sales of alkylated oil. After the Spring Festival holiday, the retail price of gasoline greatly dropped, and the trading activity in the gasoline market was relatively stagnant. Thus, most downstream users were cautious about operating, and the alkylated oil prices fluctuated within a narrow range.

At present, the downstream demand for alkylated oil remains weak, giving thin support to the increase of alkylated oil prices. In the short term, the international crude oil prices will greatly fluctuate, giving limited support to China’s alkylated oil market. As downstream users will start to replenish stocks gradually, the demand for alkylated oil will improve to some extent. Besides, the inventory pressure on producers grows somewhat after the Spring Festival, thus it will be tough for producers to raise the alkylated oil prices. On the whole, SCI predicts that China’s alkylated oil prices will decline this week.