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Reduced production and demand gap in the second quarter to boost the refined oil market

Reduced production and demand gap in the second quarter to boost the refined oil market

(Summary description)In the second quarter, the difference in demand for refined oil production in China will decrease. This may boost the domestic market. The domestic refined oil market may usher in a rare "window perio

Reduced production and demand gap in the second quarter to boost the refined oil market

(Summary description)In the second quarter, the difference in demand for refined oil production in China will decrease. This may boost the domestic market. The domestic refined oil market may usher in a rare "window perio

Information

  In the second quarter, the difference in demand for refined oil production in China will decrease. This may boost the domestic market. The domestic refined oil market may usher in a rare "window period" of increasing sales and increasing efficiency in recent years.

 

  The peak of refined oil consumption in summer is approaching, but domestic refined oil production is expected to decline. Affected by this, the domestic demand for refined oil products in the second quarter will decrease by about 40% year-on-year. According to the data from the China National Petroleum Planning Institute, the apparent domestic consumption of refined oil products in the second quarter will increase by 3% year-on-year, and the output of refined oil products will decrease by 1.9% year-on-year.

 

The main reason for the decline in refined oil output was the shutdown and maintenance of many state-owned refineries in the second quarter. According to China Petroleum News, at least 11 state-owned refineries ushered in the "repair season" in the second quarter. PetroChina has overhauled six companies including Urumqi Petrochemical and Dalian Xitai, involving a daily crude oil processing capacity of about 850,000 barrels. This will temporarily ease the pressure of oversupply in the refined oil market.

 

  In addition to the maintenance of state-owned refineries, the decline in refined oil output is also related to the decline in geochemical refinery output due to the re-striction of consumption tax collection. Affected by the comprehensive strengthening of the supervision of refined oil consumption tax, the tax cost of local refineries has increased, conventional refining equipment has suffered severe losses, and the operating rate has been sluggish. Part of the refining in the second quarter has gradually joined the ranks of shutdown and maintenance. According to the statistics of the United Futures Network, as of early April, there have been overhauls of some 7 refining plants including Dongming Petrochemical Old Factory and Dongfang Hualong; starting in late April, the number of refining and repairing manufacturers continued to increase.

 

  The second quarter is a rare opportunity to increase sales and increase efficiency of refined oil products during the year. Ding Shaoheng, deputy director of the Marketing Institute of the China National Petroleum Planning Institute, believes that the reduction in the gap between production and demand will play a good supporting role in the market price of refined oil products. State-owned refineries and sales units need to seize the opportunity and actively respond. For state-owned refineries, due to large-scale overhauls, the arrival rate of refined oil supplied to sales units will decrease in the next one or two months. Sales units should make predictive judgments on the supply of state-owned refineries, increase the scale of external resource extraction, and seize the favorable opportunities of increased demand for refined oil products and price increases to expand sales and increase efficiency. After July, gasoline and diesel demand also have a large downward pressure.

 

  Large-scale maintenance in the second quarter will not affect the overall oversupply of the refined oil market. After the "window period", the refined oil market may usher in more intense competition. Ding Shaoheng believes that the shutdown and maintenance will lead to a gap in the supply of compliant oil products, which will lead to tight structural supply in the refined oil market. After two or three months, the overhauled state-owned refineries will resume production one after another. The refined oil produced by newly-built large-scale private refineries such as Hengli Petrochemicals will also enter the market faster. Greater competitive pressure. "Sales units must continue to maintain the strength of oil product exports from May to June, balance the domestic market, and lay the foundation for more intense competition in the future." Ding Shaoheng said. (From China Energy Network)

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