Bearish sentiment predominated in domestic oil product wholesale market as market players worried imports would rise significantly on reductions in import tariffs.
"It is clear that the government lowered import tariffs to spur imports, and the overall supply may become abundant if two state-owned oil giants increased imports,” said a private trader.
The opinion was echoed by some oil product suppliers for Sinopec. “Sales pressures would rise and revenues would fall too in that case,” said one of the suppliers in East China.
Sinopec and PetroChina canceled gasoil supply control in Beijing Monday, where a few private traders continued to lower quotations and some middlemen even started to undersell their resources. Meantime, in East China and Shandong Province, independent refineries decreased gasoline and gasoil prices to promote sales.
Ex-refinery prices of both gasoline and gasoil from Shandong independent refineries declined Yuan 50/mt Monday, C1’s data showed.
"We have to halt feedstock purchasing in case that market fundamentals became much weaker,” said a source with one independent refinery.
However, an international trader denoted there were still possibilities that state-owned oil majors still maintained moderate imports, because they did not import as much as gasoil as scheduled in the second quarter.
Market performances may not improve in the near term amid the tariff cuts and hefty losses in international crude prices, market sources predicted.
China will slash import tariffs on gasoil and jet from 6% and 9% to zero and cut that on gasoline from 5% to 1%, effective from Jul 1.
