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 postponed or even "stranded," due to minimal changes that fall below the threshold of 50 yuan per ton. This uncertainty has created confusion among traders and market participants.
With the off-season demand for refined oil products coinciding with the implementation of the new mechanism, the market has become more volatile. Sales companies like Sinopec and PetroChina are reportedly frustrated, as wholesale prices for gasoline and diesel have hit a "freezing point." The new pricing mechanism, which took effect after the Qingming Festival, will now be tested for the first time on April 10.
Since the last price cut on March 27, international crude oil prices saw six consecutive gains, only to drop sharply following weak economic data from Europe and the U.S. On April 5, the London May Brent crude contract fell by $2.22, or 2.09%, signaling further downward pressure. Analyst Han Jingyuan from Treasure Island noted that during the Qingming holiday, crude oil prices were under pressure from rising inventories and poor economic indicators, making a price decline difficult to reverse.
Under the new mechanism, four crude oil benchmarks—Brent, Brent DTD, Dubai, and ESPO—are used for reference. As of April 7, the rate of change for these benchmarks was just 0.6%, lower than before the holiday. Meanwhile, WTI crude rose by 2.65% over eight working days, while Brent remained nearly flat. This mixed performance suggests that any potential price adjustment would likely be minimal.
Analysts believe that if the price change is less than 50 yuan per ton, the adjustment window on April 10 may be closed. According to the new rules, adjustments below this threshold will not be implemented and will instead be carried over to the next cycle. Zhuo Chuang analyst Chen Qing noted that the domestic refined oil price is still within an upward range, but it’s possible that no adjustment will occur due to the low rate of change.
Looking ahead, Anxun Siswang Energy estimates that the retail price increase may approach the 50-yuan-per-ton threshold, making it unlikely for a price hike in the coming week. If the adjustment is delayed, the next review period might shift to April 24–25. This uncertainty has led many middlemen to adopt a wait-and-see approach, shortening their replenishment cycles to about a week.
Sinopec and CNPC are also struggling with oversupply and weak demand. With sales down by around 30% in some regions, the challenge of meeting sales targets has intensified. Analysts predict that diesel inventory levels could remain above 30 days, leading to a monthly surplus of 2–3.5 million tons.
April marks the lowest point in diesel supply for the second quarter, with refinery maintenance reducing crude processing volumes. This oversupply has led to sluggish market activity, with prices remaining weak despite slight improvements after the last adjustment.
In the broader context, the global economic outlook remains uncertain, with debt crises and reduced investment activities in Europe and the U.S. contributing to downward pressure on oil prices. Last year’s three consecutive price cuts in the second quarter had a significant impact on the market, and similar trends could repeat this year, worsening the diesel market further.
As of April 2, diesel prices stood at 7,972 yuan per ton, down 37 yuan from the previous adjustment. Gasoline prices also declined slightly. Gao Chengsha from Zhongyu Information highlighted that the new pricing mechanism has disrupted traditional arbitrage strategies, leading to cautious behavior among traders. Companies are focusing on monitoring the market, reducing purchases, and releasing inventory, which has slowed resource circulation and kept prices low.
By March 31, total commercial gasoline and diesel inventories in major provinces had dropped to 133,000 tons, a 2% decrease from the previous half-month. Diesel inventories fell by 12%, reflecting ongoing challenges in the market.
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