The first price adjustment period under the newly introduced refined oil pricing mechanism is set for April 10. However, the current trend in international crude oil prices may lead to a situation where this adjustment could be delayed or even "stranded" due to minimal changes below the 50 yuan per ton threshold. This has added uncertainty to an already volatile market.
With off-season demand and the introduction of the new pricing rules, traders are now more confused than ever. Sales companies like Sinopec and PetroChina have reported sluggish wholesale activity, with gasoline and diesel prices hitting a "freezing point." The new pricing mechanism will take effect after the Qingming Festival, and if the adjustment window opens as scheduled on April 10, it would mark the first change since the policy was implemented.
Since the last price cut on March 27, global crude oil prices had risen for six consecutive days, but then dropped sharply due to weak economic data from Europe and the U.S., falling nearly 5% over three days. As of April 5, the London May Brent crude contract fell by $2.22, down 2.09% from the previous session.
Analyst Han Jingyuan from Treasure Island noted that during the Qingming holiday, crude oil prices continued to decline due to poor economic indicators and rising inventory levels. According to the new pricing mechanism, four types of crude oil—Brent, Brent DTD, Dubai, and ESPO—are used as references.
By April 7, the rate of change for these reference crudes was only 0.6%, lower than before the holiday. Meanwhile, WTI crude saw a 2.65% increase over eight working days, while Brent fell slightly by 0.08%. Other benchmarks like Dubai and Oman showed gains.
Han Jingyuan believes the April 10 adjustment window might be closed if the price change is less than 50 yuan per ton or 0.05 yuan per liter. The new mechanism states that adjustments below this threshold will not be made and will be carried forward to the next cycle.
Zhuo Chuang analyst Chen Qing also noted that the domestic refining market is still within an upward trend, but the adjustment may not occur due to the small rate of change. Anxun Siswang Energy estimates that by April 10, the price change could reach 40 yuan per ton, and if Brent prices continue to fall, the retail price adjustment may not happen.
If the adjustment is postponed, the next cycle could start around April 24–25. The new pricing mechanism has left middlemen uncertain, leading many to adopt a wait-and-see approach. With frequent adjustments increasing risk and reducing profit margins, many are now holding back and shortening their replenishment cycles.
Sinopec and CNPC are also struggling with oversupply and weak demand. In March, sales were down by about 30% nationwide, with some regions achieving only 50% of their targets. Analysts expect diesel inventories to remain high, with a surplus of 2–3.5 million tons per month in the second quarter.
April marks the lowest point for diesel supply, with refinery maintenance reducing crude processing by 2.51 million tons. In May, the reduction was 1.71 million tons, making this quarter one of the lowest in five years for refinery maintenance.
Market participants remain divided on future oil price trends, but oversupply continues to dominate the domestic market. Even after any potential price adjustment, the market remains weak, with little end-user demand and limited speculative activity.
In April, diesel prices dropped to 7,972 yuan per ton, down 37 yuan from March 27, while 93# gasoline averaged 9,302 yuan per ton, a decrease of 23 yuan. Analyst Gao Chengsha from Zhongyu Information noted that the new pricing mechanism has disrupted large-scale arbitrage, leading to cautious behavior among traders.
As of March 31, total commercial gasoline and diesel inventories in major provinces were 133,000 tons, a 2% decrease from the previous half. Diesel inventories dropped by 12% compared to two weeks earlier, reflecting the ongoing challenges in the market.
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