Q4 China-Origin Mixed Aromatics Price Suffers Decline Risk
As the direct downstream product of mixed aromatics, the prices of blended gasoline are closely associated with the prices of mixed aromatics. From Q4, 2018, the prices of blended gasoline started declining from highs. According to SCI, during that period, the international crude oil prices dropped sharply, and the gasoline demand entered its off season. Due to the two bearish factors, the prices of blended gasoline slumped. In 2019, with the upgrade of refined oil quality and the promotion of ethanol gasoline, the blended gasoline market became weak, and the number of blended gasoline companies dropped dramatically. Due to the sluggish demand, the prices of blended gasoline kept decreasing from the middle of September.
In the future, the gasoline market will enter its off season soon, and many participants hold that in Q4, 2019, the international crude oil prices will underperform. Therefore, the future prices of blended gasoline may continue declining, affecting the prices of mixed aromatics.
Currently, many mixed aromatics traders pay close attention to Sinopec’s gasoline purchase guide price from independent refineries, and according to SCI, in the second half of October, the guide price is RMB 5,900/mt, down RMB 350/mt from the first half of October. Due to the decline of arbitrage profits, most downstream mixed aromatics participants are unwilling to replenish their inventory, and in order to promote sales, many mixed aromatics traders have to decline their offers further.
In conclusion, in Q4, 2019, the international crude oil prices are likely to decline, affecting the gasoline market in China, and the demand for mixed aromatics may become weak. Though the rigid demand and the replenishment of participants may support the market for a short period, the overall mixed aromatics market is likely to underperform because of the sluggish end demand.
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