China Alkylated Oil Prices to Drop After the Spring Festival

Before the Spring Festival, most sellers in the alkylated oil market had reduced the inventory, and buyers had largely completed the stock-up for alkylated oil. Therefore, China’s alkylated oil prices were largely stable. However, most market participants adopted cautious attitudes to China’s alkylated oil market after the Spring Festival.

Currently, the inventory at alkylated oil producers is low, and the spot alkylated oil resources are few. Meanwhile, the alkylation units run steadily. The national operating rate of alkylation unit is 60.04% or so, and the operating rate of alkylation units in Shandong is about 53%. With the approach of the Spring Festival, units at some refineries will be shut down for maintenance. Hereinto, units at Shandong Xingze Chemical and Qingdao Ruifengyuan Chemical will take overhauls, and units at Puyang Zhongwei Fine Chemical will be restarted before the Spring Festival. It is predicted that units at Hubei Tianyuan Chemical take overhauls from February 8 for a short time, and units at Zhongjia Huachen Energy will be shut down for maintenance from February 10. Therefore, SCI reckons that the overall operating rate of alkylation unit will inch down, but the overall supply will be largely stable.

At present, downstream users have largely completed the stock-up for alkylated oil. Meanwhile, as the new rules on the consumption tax will be formally executed in March 2018, blended oil traders hold wait-and-see sentiment towards the alkylated oil market and show moderate interest in stocking up.

Besides, most orders at alkylated oil producers can be executed to around the Spring Festival. As the alkylation units will run steadily during the Spring Festival holiday, alkylated oil producers will suffer inventory pressure after the Spring Festival holiday.

On the whole, China’s alkylated oil market will be tepid during the Spring Festival holiday, and SCI predicts that the alkylated oil prices will hover at RMB 6,000/mt in recent days. Market participants need to pay close attention to the inventory at sellers, and it is reckoned that the alkylated oil prices will move sideways.