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JLC with headquarters located in Beijing, and branch offices in Shanghai, Shandong, Guangzhou and Singapore, is a leading provider of market intelligence and pricing solutions…

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Refining Margins In China's Shangdong Hub Continue To Rise

Shandong-based independent refiners have seen their crude refining margins gain for four straight weeks, on the back of strong product prices.

Refiners' indicative product sales revenue for refining domestic Shengli crude settled at CNY 6.534/mt on September 12, up by 1.37% week on week. Meanwhile, the ex-terminal price of Shengli crude grew by 0.48% to CNY 4.150/mt, JLC assessment shows. As a result, their refining crude margins widened further by 18.18% to CNY 442/mt.

Shandong refiners’ indicative product sales revenue is assessed based on prices of oil products they produce, and may differ as the crudes they are refining have different yields. Their main products mainly include gasoline, diesel, coke gas oil, LPG, petroleum coke, heavy oil and propylene.

Shandong light marine crude refining margins rose by 20.7% from a week before to CNY 443/mt on September 12, as the indicative product sales revenue for the crude moved upwards by 1.79% to CNY 7.181/mt. Spot light marine crude with the density at 0.88 was traded 1.11% higher from a week before at CNY4.550/mt in Shandong on the day, refiner sources told JLC.

In processing Oman crude, the theoretical refining margins were CNY 508/mt on Wednesday, up by 30.3% week on week, as the indicative product sales revenue gained 1.89% to CNY 7.213/mt and the costs of spot Oman crude rose by a milder 0.35% to CNY 4.605/mt CFR Qingdao Port for November delivery, JLC assessed.

Shandong crude refining margins are expected to keep buoyant in the subsequent week, as strong demand fundamentals, coupled with optimism among market participants, will keep product prices elevated.

In contrast to desirable crude refining margins, Shandong refiners suffered a loss of CNY 8/mt for their coking units on September 12, versus a margin of CNY 35/mt a week before, as coking feedstock rose and product sales revenue kept steady. The price of 110# bitumen, coking feedstock, rose by 1.11% from a week before to CNY 4.550 /mt in the region, while the indicative sales revenue stayed at CNY 4.925/mt. The coking margins look to remain bearish in the coming week, as coking feedstock cost is set to rise on tight availability

At the time of writing, the USD traded at 6.84 to the CNY (Yuan)


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