China Alkylated Oil Prices to Go up in September

In early August, China’s alkylated oil prices increased by RMB 500/mt in one week. On the one hand, supported by the increased CP August, the civil-use gas and industrial-use gas prices went up. Therefore, the costs of alkylated oil increased. On the other hand, influenced by the relatively high cost, the operating rates of alkylation units were low, and the inventories at alkylated oil producers hovered at low levels. Thus the overall alkylated oil supply was tight. Besides, the demand for alkylated oil improved, as refineries of Sinopec raised the procurement for alkylated oil and some state-owned refineries purchased alkylated oil from the market. On the whole, China’s alkylated oil prices increased gradually.

At the beginning of August, the prices of gasoline and gasoline feedstock obviously increased. As the international crude oil prices crashed after August 9, China’s refined oil market underperformed, and the alkylated oil prices fluctuated within a narrow range.

Currently, the international crude oil prices fluctuate within a narrow range, and the profits at blenders narrow. Moreover, as the demand for gasoline weakens, the demand for alkylated oil drops gradually. Given the relatively high cost, SCI estimates that China’s alkylated oil prices will decline by RMB 100-200/mt in the short term. According to the tradition, the demand for gasoline and alkylated oil will encounter the peak season in September and October, thus the alkylated oil prices will move up in the long run. On the whole, SCI reckons that China’s alkylated oil prices will inch down at the end of August and then move up in September, and the increase in the alkylated oil prices will reach RMB 200-300/mt.