China Alkylated Oil Market Remained Tepid

As seen in the chart, the alkylated oil prices in Shandong crashed at the end of February and then fluctuated within a narrow range. On the one hand, as new consumption tax would be imposed on the refined oil market in March, blenders were cautious about their operation. Therefore, the demand for alkylated oil was relatively sluggish. Besides, the gasoline market underperformed, so most downstream users consumed their own stocks. The alkylated oil market was mediocre curbed by the stagnant demand from the gasoline market.

On the other hand, the international crude oil prices moved sideways, giving limited support to China’s alkylated oil market. Moreover, the MTBE market and mixed aromatics market were tepid, and most downstream users held bearish sentiment towards the MTBE market and mixed aromatics market. As alkylated oil producers suffered sales pressure, most of them chose to sell goods preferentially. Meanwhile, the C4R2 prices declined, giving thin support to the alkylated oil prices. Up to March 15, the average alkylated oil price in Shandong dropped to RMB 5,645/mt, which hit a new low in 2018.

Currently, most downstream users choose to stock up on the dips, so the sales pressure on alkylated oil producers slightly declines. Most alkylated oil producers intend to raise the alkylated oil prices. However, downstream users still adopt a bearish attitude to the alkylated oil market, so the buying interest in alkylated oil drops quickly. Curbed by the limited demand, alkylated oil producers maintain relatively stable offers and adjust the prices in accordance with the inventory condition. In the short term, influenced by the relatively tepid gasoline market, most downstream users will continue to show poor interest in purchasing alkylated oil resources. Therefore, SCI reckons that China’s alkylated oil market will remain tepid.