Import Volume of Aromatic Mixture Will Crash in Q4

Import Volume of Aromatic Mixture Will Crash in Q4

Influenced by the low-priced crude oil and the reform for the pricing mechanism of refined oil, the profit of blended oil surged in 2016, and the import volume of aromatic mixture reached a record high of 11,700kt. In 2017, the overall Brent crude oil price was over $50/bbl, and the average increased by $8/bbl from 2016. The domestic end demand for gasoline remained sluggish, and the profit of blended oil traders crashed. Thus, the price advantages of high-cost aromatic mixture have vanished, and the import volume of aromatic mixture may decrease obviously.

According to SCI’s statistics, the total import volume of aromatic mixture from January to August was about 7,814kt, down 4.13% from 2016. Besides, the import cost of aromatic mixture kept rising from August 2017. In September, the import cost of aromatic mixture climbed by RMB 560/mt, but the increase of blended oil price was below RMB 250/mt. The stagnant blended oil market severely dragged down the increase of imported aromatic mixture volume. Thus, the profit of aromatic mixture dropped sharply. According to SCI, the import volume of aromatic mixture in September may be below 600kt, down over 30% from 2016. Moreover, SCI predicts that the import volume of aromatic mixture will be poor in Q4, 2017. It is estimated that the total import volume in 2017 may be below 9,900kt.

After the high imported aromatic mixture volume of 11,7000kt in 2016, the import volume of aromatic mixture collapsed in 2017. SCI holds that it is mainly influenced by the crude oil and blended oil market.

In 2017, the import cost of aromatic mixture increased greatly, and the cost price of aromatic mixture CFR China was largely higher than that of aromatic mixture in 2016. SCI learned that the import cost of aromatic mixture was related to the settlement prices of Brent crude oil. There was an absolute positive correlation between the Brent oil price trend and the import cost of aromatic mixture. SCI’s statistics showed that the Brent oil prices hovered at $28–56/bbl in 2016, and the average price was about $44/bbl. Meanwhile, the average import cost of aromatic mixture was around RMB 4,695/mt. In 2017, the Brent oil prices were around $45–59/bbl, and the average price was about $52/bbl. The average import cost of aromatic mixture was around RMB 5,225/mt. Therefore, the average cost increased by RMB 530/mt, severely squeezing the profit space of import traders.

According to the chart, the profit of blended oil in 2017 dipped obviously from 2016, and the profit was the theoretical profit which included the cost and loss. SCI learned that the cost of blended oil traders about labour, tanks and loss was around RMB 120–180/mt. Thus, most blended oil traders suffered profit loss and were cautious about the procurement for high-priced aromatic mixture. The demand for aromatic mixture decreased obviously, hindering the increase of aromatic mixture price.

On the whole, China’s aromatic mixture market is placed in an awkward position. The cost remains high, while the demand for aromatic mixture drops. The dealing price is stagnant, curbed by the poor downstream demand. Therefore, some import traders adopt cautious attitude to the aromatic mixture market. SCI predicts that the import volume of aromatic mixture will crash in Q4, 2017.