Profits from the reforming units at independent refineries in Shandong remain at low levels

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According to the theoretical profit model data for catalytic reforming units in independent refineries in Shandong provided by Zhuochuang Information, as of March 21, 2018, the theoretical profit per ton for such units in Shandong was 133.88 yuan, indicating that they were in a phase of low-level adjustment. In December 2017, Zhuochuang Information conducted a partial optimization and adjustment of the theoretical profit model for the catalytic reforming units in independent refineries in Shandong, by taking into account factors such as the raw material composition, yields of downstream products, losses, and processing costs associated with these units. According to the data from the existing profit model, as of March 21, 2018, the theoretical profit per ton for the catalytic reforming units at independent refineries in Shandong was 133.88 yuan/ton, indicating that these units were in a phase of low-level adjustment. Since the beginning of 2018, after reaching a peak, the price of straight-run naphtha began a slow decline on January 15. As of March 21, 2018, it had fallen by 606 yuan per ton compared to the high level of straight-run naphtha in 2018. However, the reduction in raw material costs has not created room for an increase in profits for the reforming units of independent refineries in Shandong. From the perspective of specific product categories, the price of dry gas remains relatively stable, while the prices of dew point oil, residue oil, and pentane oil have dropped by less than 300 yuan per ton. The prices of reformed liquefied gas and pure benzene both plummeted by more than 1,000 yuan per ton, while the price of the main product, reformed gasoline, dropped by nearly 700 yuan per ton. Therefore, despite a decline in raw material costs, the overall downturn in downstream products has significantly weighed on the profits of reforming units. Overall, since January 15, 2018, the prices of raw materials for independent refineries in Shandong have declined significantly. However, reformation products such as pure benzene, reformated liquefied gas, and reformated gasoline have seen even greater price drops, which has kept the profits of the reformation units at these refineries at low levels throughout this period. Looking at the later period, due to policy-related factors, the supply and demand situation for naphtha in Shandong’s independent refineries is relatively weak, with evident signs of weakness on the demand side. Therefore, in the coming period, it will be difficult for the naphtha prices at independent refineries in Shandong to experience a significant upward trend. Additionally, regarding reformed products, high inventory levels of xylene at ports after the Spring Festival, coupled with the large-scale export of xylene by Hongrun Petrochemical, have had an impact on the reformed gasoline market. At the same time, in the gasoline market, aside from the short-term positive impact brought about by the Qingming holiday, there are relatively few favorable factors in both domestic and international markets; therefore, it is likely that gasoline prices will remain stable in the short term. Therefore, Zhuochuang believes that the overall resilience of the reformulated gasoline market will remain relatively weak in the coming period. Based on this analysis, Zhuochuang predicts that over the next two weeks, the theoretical profit from catalytic reforming at independent refineries in Shandong is likely to range between 60 and 300 yuan per ton, with a low-level fluctuation trend remaining the most probable outcome.