In May, the average
comprehensive refining profit at Shandong independent refineries was recorded
at RMB 289/mt, up RMB 12.4/mt MoM. The average feedstock cost fell by RMB
228/mt, following the decline in average crude oil prices. On the product side,
gasoline and diesel demand remained flat after the May Day holiday, but both
two fuel prices rose later in the month because refiners actively lifted their
offers amid a projection of supply cut on the large scale of maintenance. Even
so, the average prices of gasoline and diesel still posted a decline, with
gasoline’s falling deeper. As for petroleum coke, the average price slipped
significantly amid its supply-demand imbalance. Considering revenues from other
by-products, refined product revenues at Shandong independent refineries
narrowed by RMB 214/mt MoM, which was marginally below the decrease in
feedstock costs, contributing to minor gains in refining margins.
Heading
into June, crude oil prices are expected to ramp up, likely driving feedstock
costs higher. On the product side, gasoline demand is projected to remain flat
but be consistently eroded by NEVs. Moreover, diesel demand is likely to enter
a seasonal lull, enfeebled by hotter weather and the start of the rainy season
in southern China. As a result, gasoline and diesel prices are projected to
drop. Factoring in revenues from other by-products, refined product revenues at
Shandong independent refineries are estimated to slip. Overall, comprehensive
refining profits at Shandong independent refineries are expected to ease.