From January to September 2019, the average comprehensive bitumen production profit at Shandong independent refineries was RMB 189.52/mt, up RMB 130.09/mt from last year. During this period, the comprehensive bitumen production profits first declined and then went up.
From January to May, the overall bitumen production profits trended down. In January, the monthly average bitumen production profit was RMB 212.26/mt, and in May, the monthly average bitumen production profit dropped to RMB -55.61/mt. Though from January to May, the prices of bitumen and other oil refining products such as gasoline, diesel, straight-run naphtha, etc. increased to some extent, the increase of bitumen production cost was significant. From January to April, the international crude oil prices continued rising, and though in May, the international crude oil prices dropped, the price decrease was limited. Moreover, from the beginning of 2019, the supply of Merey crude oil was extremely unstable, and from January to May, the overall cost of Merey crude oil at refineries increased dramatically. Due to the surge of bitumen production cost, the bitumen production profits from January to May kept declining.
From June, the bitumen production profits at Shandong independent refineries started reviving. The short supply of Merey crude oil was relieved to some extent, and the overall cost of Merey crude oil at refineries dropped. With the decline of production cost, the average bitumen production profit at Shandong independent refineries reached RMB 463.12/mt in August.
In September, an independent refinery in Shandong signed many bitumen production contracts with the price of RMB 3,300/mt. As a consequence, the increase of the bitumen prices in Shandong was limited, and with the drop of market demand, the bitumen production profits at Shandong independent refineries declined from highs.
On the whole, from Q1 to Q3, 2019, the bitumen production profits at Shandong independent refineries first decreased and then revived, and the overall profits in 2019 performed better from 2018.
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