This week, international crude oil rose slightly, leading to a favorable factor in the base oil market, and some refineries raised prices. Downstream demand is small and warm-up.
The listing price of Southern China Huizhou refinery rose by 100 yuan / ton, but the output of refinery was very small. Traders increased the price. In some refineries in Shandong, the price of goods was increased, and Xintai 150N rose by 130 yuan / ton, and the Henderson refinery kept a stable shipment. The import resources part, the Formosa Plastics price rose slightly, but due to the low volume of Southern China Huizhou refinery shipments, many downstream manufacturers switched to Formosa Plastics 150N as a replacement. 150N may increase in the later stage of Formosa Plastics 。 Thailand 150BS price unchanged, short-term stable shipment.
After the holiday, the demand for downstream manufacturers is gradually warming, and the market is continuing smoothly. It is expected that the trading in Southern China will gradually pick up, and the refinery price increases will stimulate the downstream to get the goods. The base oil market continued to rise steadily.
With the end of the Spring Festival holiday, we have also started the new year's work. Looking back at the base oil market in 2018, the overall performance of the peak season is not prosperous, and the off-season is even lighter. Especially in the second half of the year, the downstream demand is weak, and the market is sluggish. Refineries and traders are miserable. How will our market change in 2019?
1, the new installations have been put into production one after another, and resource digesting becomes the key.
The above chart shows the expansion of China's base oil refineries in the past two years. With the advent of Dalian Hengli petrochemical, Liaoning Haihua and the Yellow River new materials and other refinery products, the market supply will increase in 2019. Resource digestion will become the main issue in the coming year.
2., oversupply is normal, price war is inevitable.
At present, the overcapacity of the domestic base oil market is particularly significant. In the past five years, the total capacity of China's basic oil has expanded continuously, from 6 million 420 thousand tons in 2014 to 10 million 370 thousand tons in 2018, totaling an increase of 3 million 950 thousand tons. In 2018 alone, it increased 1 million 850 thousand tons of capacity. While the downstream oil production growth is slow, on the one hand, because of the macroeconomic downturn, the demand for lubricants is not as good as expected; on the other hand, under the impetus of international oil prices, the average price of base oil has increased substantially in 2018, and the continuous high cost still drives the domestic oil industry to rise again, rising at 3-5%. However, the terminal market is not buying the price of lubricants, and the terminal is weak, which is a drag on the downstream lubricant enterprises falling into demand and purchasing products.Therefore, in the case of slower demand for downstream, price war and high inventory will become the norm of some refineries in the future.
To sum up, the base oil market in 2019 is still a challenging year. On the supply side, the new base oil production capacity will focus on the outbreak in 2019, and the output will increase. On the demand side, due to the slow growth in the demand for industrial oil and vehicle oil, the domestic lubricating oil market is in a steady growth period, and demand is expected to increase steadily, but the increase is limited.
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