The relevant information this week is as follows:
1. Raw material
Crude oil: International crude oil prices have fallen sharply for two consecutive statistical periods. Compared with the high in early April, they have dropped by nearly 7 US dollars. Although during this statistical period, WTI has experienced small daily increases, while without the war risk premium, even demand from China and the United States is increasing, the capacity for oil price increases is still limited. OPEC+ will take a meeting next month to decide production in the second half of the year, and the production cuts will probably continue. At present, the main uncertainty in the market is the Federal Reserve’s interest rate cut strategy, otherwise oil prices will slowly decline amid shocks. Citibank expects Brent crude oil prices to average US$86 per barrel in the second quarter of 2024, before falling to US$74 in the third quarter.
Natural gas: The demand for natural gas is gradually decreasing, and the JKM index is running at a low level.
2. Production capacity
Among the country’s major production and refineries, Maoming and Dalian have suspended production，the rest are operating normally.
|
Period |
Factory |
Status |
|
20240429—0512 |
Daqing Pec |
Normal |
|
20240429—0512 |
Daqing Ref & Che |
Normal |
|
20240429—0512 |
Dalian Pec |
Suspended |
|
20240429—0512 |
Fushun Pec |
Normal |
|
20240429—0512 |
Lanzhou Pec |
Normal |
|
20240429—0512 |
Jingmen Pec |
Normal |
|
20240429—0512 |
Gaoqiao Pec |
Normal |
|
20240429—0512 |
Maoming Pec |
Suspended |
|
20240429—0512 |
Jinan Ref & Che |
Normal |
|
20240429—0512 |
Nanyang Pec |
Normal |
|
20240429—0512 |
Panjing Beiran |
Normal |
3. Stock
The completion of the upgrade in Fushun and the sluggish downstream market have led to a significant increase in the total domestic paraffin inventory, with the remaining inventory of approximately 20,000 tons.
4. Market demand
Only downstream companies purchase on demand, and the total transaction volume is low.
5. Industry analysis overview
With the price of the fully refined model also reduced by ￥200, paraffin has clearly entered a downward cycle. Based on past experience, it may last until July. However, as international oil prices are currently gradually declining, without favorable conditions such as the Federal Reserve’s interest rate cuts, the relatively low price of paraffin will last longer with low oil prices.
6. Price expectations
After remaining stable for a period of time, paraffin prices continued to fall further along with oil prices.