Floods in Southwest China have weakened gasoil and gasoline demand notably in the past week or so, C1 found.
Gasoil and gasoline retail and wholesale trading have become sluggish in Sichuan and Chongqing in Southwest China, which have been affected most significantly by floods.
However, oil product deliveries into these places have also been impacted and state-owned oil majors have pushed up gasoil and gasoline prices close to the ceiling in Sichuan and Chongqing, offering hardly any discounts. The market is worried about cargo arrivals in the near future, said some market sources.
Some roads in northeast Sichuan have been damaged seriously, and this has impacted oil product deliveries into Sichuan, according to a source from a state-owned oil company. “We worry that floods may not be over soon and we have to ensure supply to the retail market,” the source said.
Local independent wholesalers have weak interest in business as end-user demand is still sluggish and their profit is thin, the source said.
Gasoil and gasoline prices in Southwest China may stay strong amid expectation of tight supply, stronger demand from autumn harvest and stock replenishment before the holiday for the National Day in early October.
Oil product demand in Northwest China’s Shaanxi Province has also been weakened by heavy rain lately.
