Mid-Sep Trader Diesel Storage Capacity Utilization Dropped
According to SCI’s statistics, up to September 16, the overall diesel storage capacity utilization at refined oil traders was 26.65%, down 0.86% from the end of August.
In H1 September, the U.S. was impacted by typhoon from Gulf of Mexico, and Saudi Arabia reduced its crude oil settlement prices in Asia. Meanwhile, the COVID-19 issue in many countries was still serious, and the global demand for crude oil was full of uncertainties. As a consequence, the international crude oil prices decreased significantly. In China, many participants believed that the National Development and Reform Commission would cut the retail ceiling prices of gasoline and diesel on September 18 dramatically, leading to a bearish market atmosphere. Moreover, the demand for diesel revived slightly in H1 September, and traders’ replenishment was limited. Accordingly, the diesel storage capacity utilization at traders dropped.
As for the prices of diesel, due to the bearish market sentiment and the serious sales pressure, most state-owned refineries cut their prices of diesel by RMB 50-150/mt, and the diesel price decrease at a few state-owned refineries even exceeded RMB 200/mt. In terms of independent refineries, the sales of diesel at them performed better from state-owned refineries, and the overall prices of diesel at Shandong independent refineries grew by around RMB 50/mt.
According to SCI’s statistics, up to September 16, the average price of 0# diesel at Shandong independent refineries was RMB 4,756/mt, up RMB 35/mt from the end of August. The average price of 0# diesel at China’s state-owned refineries was RMB 5,289/mt, down RMB 136/mt from the end of August. As for retails, up to September 16, the theoretical profits of selling independent refineries’ diesel at petrol stations were RMB 1,439/mt, down RMB 35/mt from the end of August, and the theoretical profits of selling independent refineries’ gasoline at petrol stations were RMB 2,223/mt, up RMB 21/mt from the end of August.
SCI reckons that in H2 September, the international crude oil prices are unlikely to revive significantly, giving limited support to China’s refined oil market. However, with the approach of the National Day holiday, many people will travel by cars, stimulating the consumption volume of gasoline. Meanwhile, the end of fishing-off season will boost the demand for diesel. Accordingly, SCI believes that China’s refined oil traders will replenish their inventory intensively in H2 September, and the dealings in the diesel market will improve, leading to an increase in diesel storage capacity utilization at traders at the end of September. On September 18, the National Development and Reform Commission will cut the retail ceiling prices of gasoline and diesel significantly, and many state-owned refineries are estimated to cut their diesel wholesale prices by RMB 50-100/mt. Meanwhile, considering the relatively balanced diesel production and sales at independent refineries, the prices of diesel are predicted to grow by RMB 30-50/mt.
