China's gasoline prices are projected to edge down in February due to reducing consumption and cooling market sentiment, after depleting the momentum of pre-holiday stockpiling.
Source: Mysteel OilChem
It is projected that China's daily average gasoline consumption will show a monthly fall of 3% at 0.44 million tonnes/day in February as the demand will slump in the second half following the travel peak around the Chinese New Year (CNY) holiday, per OilChem prediction model.
Source: Mysteel OilChem
Meanwhile, the daily gasoline production is estimated to be down 1.3% month on month (MoM) at 0.48 million tonnes/day in February, primarily because the independent refineries will lower the capacity utilization rates during the CNY holiday, in addition to post-holiday maintenance plans, per OilChem survey. Nevertheless, the production cut is expected to be insignificant as the state-owned refineries have raised their production targets for the month.
Source: Mysteel OilChem
In addition, China's gasoline exports are planned at 0.8 million tonnes in February, flat MoM in the face of narrow export profits, and the state-owned refineries will prioritize supplying domestic consumers.
Taken together, China's gasoline inventory is likely to increase 0.3 million tonnes at 17.5 million tonnes through February, flat with the conventional level in the second half of 2023.
Therefore, while the prices gained momentum in January with pre-holiday stockpiling and rising international crude oil prices, the prices will pull back in February after the bulls are digested, on the backdrop of cooling market sentiment.
Nevertheless, the gasoline prices are projected to initiate a short rally immediately after the CNY holiday when the market players will stockpile extensively. And the speculators are likely to engage in market transactions around end-February to prepare for the speculation window around China's Qingming Festival in early April.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com