Alkylation Operating Rate Declined Under Profit Losses

Alkylation Operating Rate Declined Under Profit Losses

Recently, it was tough for alkylated oil producers to operate, as the C4R2 prices were high and the gasoline market underperformed. Accordingly, some alkylated oil producers cut the operating rates to maintain stable operation.

In recent days, the alkylation units at PetroChina Daqing Petrochemical, PetroChina Daqing Refining & Petrochemical and PetroChina Harbin Refinery have been put into operation in succession, and Shandong Zhonghai Fine Chemical stops selling C4R2 to the market. Therefore, the C4R2 supply greatly declines. Meanwhile, the C4R2 prices hover at highs, directly resulting in the profit losses of alkylation units.

On December 13, alkylated oil prices were at RMB 5,200/mt and C4R2 prices were at RMB 4,530-4,580/mt, resulting in a loss of RMB 96/mt for the alkylated oil units.

The market supply of C4R2 was tight, so the feedstock cost of alkylated oil units was at a high level. In addition, the market trading of alkylated oil was not smooth. Therefore, the alkylated oil units had profit losses. The operating rates of some alkylated oil units are expected to decrease, but SCI holds that the decrease in operating rates will not support the profit a lot. SCI estimates that the profits of alkylation units will possibly remain negative in the short term

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