China's refined oil export profits have recently plunged into negative territory primarily due to declining Asian gasoline prices, influenced by the surge in US inventory and subdued demand for gasoil in both Europe and Asia, according to the latest data from OilChem.
Specifically, the average export profits for gasoline and gasoil were recorded at Yuan -15.3/tonne and Yuan -50.3/tonne, respectively, as of December 15. These figures represent a significant decrease of 102.7% and 122.5% from the levels observed on December 1.
Source: Mysteel OilChem
For gasoline, Singapore prices were impacted by the increasing US inventory and a drop in the US gasoline-Brent crack spread to an annual low. Consequently, Singapore gasoline prices (#92, FOB) fell by 2.5% from Yuan 8,826/tonne on December 1 to Yuan 8,603/tonne by December 14. In contrast, China's gasoline prices exhibited more resilience, registering a 1% decrease to Yuan 8,462/tonne during the same period.
Source: Mysteel OilChem
As for gasoil, weakened demand in Europe, attributed to a milder winter and concerns about a slowing economy, along with subdued fundamentals in Asia, contributed to a 3% decline in Singapore gasoil prices (10ppm, FOB) from Yuan 8,059/tonne on December 1 to Yuan 7,814/tonne by December 14. China's gasoil prices experienced a relatively smaller decrease of 2% over the same period.
Source: Mysteel OilChem
Looking forward, it is anticipated that gasoline and gasoil demand in Asia will remain sluggish in the short term. However, prices in China are expected to receive support from state-owned refineries, which are likely to maintain prices after achieving their annual sales targets, although domestic demand is projected to remain flat.
Simultaneously, diminishing refined oil export quotas will impose limitations on exports, adding to the complex dynamics of the market.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com