Domestic gasoil wholesale prices may be further above retail prices after the retail ceiling was marked down by Yuan 300/mt on Oct 9, thanks to tight supply, according to market sources.
Sinopec has required its city-level sales companies to keep gasoil wholesale prices above retail ones. "Gasoil supply is still tight this month and our headquarters has told subsidiary companies to ration sales in a bid to ensure retail supply and profit. Gasoil wholesale prices are likely to stay high in the near term,"said a salesperson with Sinopec.
Oil majors have kept wholesale quotes above the retail ceiling and these quotes are below trading levels, said market sources. They traded wholesale gasoil mainly at Yuan 8,200-8,250/mt in coastal areas on Oct 9 and controlled sales. Sinopec halts wholesale supply in most regions and PetroChina suspends wholesale supply in some regions. CNOOC also limits wholesale supply, in part because of maintenance in Huizhou refinery.
Shandong-based independent refineries sold gasoil high at Yuan 8,200-8,300/mt on Oct 9. These refineries hold low gasoil stockpiles and sales are quite robust, said refinery sources. They do not expect the markdown in the retail ceiling to weigh on their gasoil prices much.
PetroChina and Sinopec's refinery operation rates are still low in early October and domestic gasoil supply shortage is not likely to disappear until the first half of November.
