Refining margins for major refineries in China with foreign crude as feedstock gained as international crude prices plunged in the past two weeks.
Based on integrated ex-refinery prices of oil products, gross margin from refining Oman crude, a representative of imported crude, was Yuan 433/mt (equivalent to minus US$8.99/bbl), hitting high level of this year, up Yuan 41/mt from two weeks ago earlier; if calculated on the basis of integrated oil products wholesale prices, gross refining margin was Yuan 1,157/mt (equivalent to minus US$23.99/bbl), sharply up Yuan 259/mt, C1's calculation showed.
Oman crude prices plummeted by US$13/bbl or 12% in the past two weeks, and June average price of the feedstock was about 10% lower than May.
The refineries saw comprehensive sales revenues of their products slightly down around Yuan 40/mt in the period.
However, major refineries refining domestic Daqing crude still encountered cost pressures, refining margin of which improved not much in negative territory because of unchanged settlement price.
Major refineries’ feedstock costs for the third quarter are estimated to be nearly 10% lower than the second quarter, according to market sources.
The window for downward adjustment in domestic oil product prices may open early July at the earliest, if Brent crude prices stayed at US$104-106/bbl, C1 reported earlier.
To better reflect refining margins of major refineries, C1 uses ex-refinery price of 93-Ron gasoline instead of 90-Ron gasoline as one of parameters from May 2011.
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.
