Refining margins for major refineries in China continued falling as prices of their products became soft against lofty crude benchmarks, C1's survey found.
If calculated on the basis of integrated oil products wholesale prices, margin for refining domestic Daqing crude was Yuan 169/mt (equivalent to US$3.48/bbl) early February, sharply down Yuan 291/mt from two weeks ago; meantime, that for those refineries processing Oman crude, a representative of imported crude, declined Yuan 86/mt to Yuan 580/mt (equivalent to US$11.81/bbl).
The refineries may face increasing cost pressures because of spiraling international crude prices and stagnant prices of oil products in the domestic market, as well as popularization of Euro III gasoil in the second half of this year, according to refinery sources. Although the 22-working-day moving average price of Brent, Dubai and Cinta crude has climbed over 9% so far, the National Development & Reform Commission did not hike oil product retail ceilings on time.
Refineries consuming Daqing crude cluster in North China and Northeast China, including Jilin Petrochemical, Dalian Petrochemical, Fushun Petrochemical, and Yanshan Petrochemical. Refineries in coastal area of South and East China, like Zhenhai Refining & Chemical, Maoming Petrochemical, Guangzhou Petrochemical, Gaoqiao Petrochemical, Jinling Petrochemical and Yangzi petrochemical, all take Oman crude as feedstock.
Starting from Apr 21, C1 calculated the refining margins of Oman crude on the basis of integrated oil products wholesale prices according to mark-to-market principle, namely using C1's assessment for the previous day's CFR price of Oman crude as feedstock cost instead of mean price of the grade in the previous month, which could better reflect changes in international crude prices.
