Analysis of the trend in refined oil products at independent refineries in Shandong in May

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In the early part of May, the increase in the prices of gasoline and diesel at independent refineries in Shandong is expected to be significant; for gasoline, this increase is estimated to range from 100 to 150 yuan per ton. As terminal profits pose a constraint, the increase in diesel prices is estimated to be around 50 to 100 yuan per ton, on a conservative note. After late May, a pullback from higher levels cannot be ruled out. In May, there was no significant increase in maintenance activities at independent refineries in Shandong. Coupled with the offsetting effect of new refineries that began operations at the end of April, it is expected that the overall supply of gasoline and diesel from these independent refineries in Shandong will remain stable. The fishing ban period, which begins in May, covers the Bohai Sea and Yellow Sea from 12:00 on May 1st to 12:00 on September 1st ； The fishing ban period in the East China Sea and South China Sea is from 12:00 on May 1 to 12:00 on September 16. Based on past experience, the fishing moratorium has a relatively limited impact on the diesel market. However, according to Zhuochuang, as of June 12, 2017, 80% of the nationwide wheat harvesting was completed; a total of 18.2 million hectares of winter wheat were harvested, of which about 17.27 million hectares were harvested using machinery, giving a mechanization rate of over 94%. Based on the timeline, the spring harvest along the Yangtze River is expected to begin in mid-May, which will put upward pressure on demand for diesel. At the same time, as temperatures rise, demand for gasoline is expected to increase somewhat compared to April. Therefore, there is some positive demand factor for both gasoline and diesel in May. In addition, on May 1, the **\"Procedures for the Management of VAT Return Verification (Trial)\\" issued by the State Taxation Administration will come into effect officially. Around the timing of policy implementation, market speculation will be active, and caution is needed regarding the risk of significant price fluctuations. From the perspective of the cracking margin, as of April 26, 2018, the gasoline cracking margin for independent refineries in Shandong was 2,440 yuan per ton, while the diesel cracking margin was 1,789 yuan per ton. Compared with data from previous years, the gasoline margin was relatively low, whereas the diesel margin was relatively high; this is also the most straightforward indication of terminal retail profits. Therefore, from the perspective of the cracking spread, even if there is an upward trend in the diesel market for independent refineries in Shandong in the future, it will be subject to significant constraints. As for gasoline, the relative strength of the component market results in relatively high production costs for gasoline. In the early stage, the increase in gasoline prices at independent refineries was constrained by demand factors and did not keep pace with that of the main raw materials. Therefore, we expect early May to be an appropriate time to correct the undervaluation of gasoline prices. Based on a comprehensive analysis, Zhuochuang predicts that the increase in the prices of gasoline and diesel at independent refineries in Shandong in the early part of May will be, optimistically, around 100–150 yuan per ton for gasoline. For diesel, due to constraints related to terminal profits, the increase is estimated to be around 50–100 yuan per ton, on a more conservative note. After late May, a pullback from higher levels cannot be ruled out.