The relevant information this week is as follows:
1. Raw material
Crude oil: Brent crude oil and WTI crude oil continue to fall, and the battle to defend US$70 has begun. The “voluntary production cuts” of OPEC+ members have obviously not been fully implemented and have not effectively boosted the market. Pure technical analysis seems to be meaningless. In the context of global economic downturn, oil prices are bound to remain low for a long time. As major consuming countries, the CPI, monetary policy, and manufacturing data of economies such as the United States, China, and the European Union will become the decisive factors supporting oil prices.
Natural gas: Natural gas is currently entering its peak season, and the JKM index continues to rise.
2. Production capacity
All major production and refineries across the country are operating normally. Daqing Refining and Chemical Co., Ltd. (about 1,000 tons), as a major producer, continues to reduce production by 50% to cope with the downward trend due to serious inventory backlog and limited sales.
3. Stock
The total domestic paraffin inventory continues to rise steadily, refreshing the annual highest inventory data; however, PetroChina and Sinopec are switching to production of high-demand models in the hope of achieving a balance between supply and sales in conjunction with sales strategies.
4. Market demand
Faced with the falling situation, terminal demand is the main focus. Due to sales tasks, the market transaction prices of most models are lower than the listed prices. The Daqing market has been trading about 200 yuan lower than the listed prices for several consecutive weeks.
5. Industry analysis overview
Major manufacturers of China’s petroleum systems announced last Friday, December 1, that the listing prices of various products would fall by 100-200 yuan, and they would tentatively be sold as “Insured sales” within the next month. Sinopec Systems announced on Tuesday, December 5, that it would follow up on PetroChina’s strategy and also lower the listing price by 150-200 yuan.
“Insured sales”: The manufacturer will give A-level dealers cash rebates based on the listed price. The amount of the cash rebate will be determined later based on the actual market performance.
6. Price expectations
Based on the above analysis, the “listed price drop + Insured sales” has been fully implemented. According to industry experience, it is estimated that the guaranteed cash rebate amount will be at least 200 yuan, and may continue for several months until the market situation improves significantly.