Refining margins for major refineries in China continued rising as international crude prices plunged from high levels since end April.
Based on integrated ex-refinery prices of oil products, the margin for refining Daqing crude stayed at a historic-low level of minus Yuan 402/mt (equivalent to minus US$8.41/bbl) on Jul 13, versus minus Yuan 418/mt two weeks earlier; those for Oman crude climbed Yuan 116/mt to Yuan 550/mt (equivalent to US$11.39/bbl), hitting the highest level of this year, higher than the average of last year, C1’s calculation showed.
July settlement prices of Daqing crude declined Yuan 101/mt or 1.6% compared with the previous month, because of drops in international crude prices in June.
June average price of Oman crude fell US$2.71/bbl or 3% on month.
The refineries saw comprehensive selling price of their products down 1-2% in the period.
However, if calculated on the basis of integrated oil products wholesale prices, gross refining margin of Oman crude was Yuan 687/mt, sharply down Yuan 469/mt. The slump could be attributable to US$7.1/bbl or 7% of increase in CFR price of the feedstock in the past two weeks.
Refining margins for major refineries may not change much in the near term, because domestic oil product adjustment window will not likely open before end July on expected range-bound crude futures, market sources anticipated.
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.
