Lead: The ongoing US-Iran conflict continues to escalate, driving up international oil prices and causing related products to rise in tandem. As of July 16, the weekly average price of high-olefin C5 in Northwest China stood at 6,999 yuan/ton, an increase of 195 yuan/ton or 2.87% compared to the previous week's average.
1. Recent High-Olefin C5 Market Prices Decline from Highs
Recently, the spot market for high-olefin C5 in Northwest China has experienced volatile increases, with prices fluctuating within a range of 6,846 to 7,107 yuan/ton. During the week, the US-Iran conflict continued to intensify, with Iran announcing the closure of the Strait of Hormuz. International oil prices surged significantly. Taking advantage of this situation, the Shandong region frequently raised gasoline quotations. Bolstered by the dual positive factors of crude oil and gasoline markets, the high-olefin C5 market in Northwest China saw volatile increases. Traders and downstream plants actively entered the market, purchasing at higher prices.
2. Crude Oil is the Main Factor Driving High-Olefin C5 Price Increases
During the week, the US-Iran conflict continued to escalate, leading to a sharp rise in international crude oil prices. The gasoline market in Shandong reversed its downtrend and began rising, with refineries frequently raising quotations. Driven by the positive news and buying sentiment, midstream and downstream players entered the market, resulting in active trading atmosphere. Supported by the dual positive factors of crude oil and gasoline markets, coupled with favorable supply-demand dynamics in the C5 light component market, prices for C5 light components rose consecutively. Traders and downstream plants participated actively, leading to good market transaction sentiment during the week.
Table 1: International Oil Price Comparison
| Product | Region | Current Period Avg. | Previous Period Avg. | Change | Change % | Unit |
|---|---|---|---|---|---|---|
| International Crude Oil Futures | WTI | 76.11 | 70.3 | 5.81 | 8.26% | USD/bbl |
| Brent | 81.06 | 73.62 | 7.44 | 10.11% | USD/bbl | |
| Mixed C5 | Shandong | 6286 | 5908 | 378 | 6.40% | Yuan/Ton |
| East China | 5668 | 5406 | 262 | 4.85% | Yuan/Ton | |
| Raffinate Oil | Shandong | 6342 | 6058 | 284 | 4.69% | Yuan/Ton |
| East China | 5760 | 5516 | 244 | 4.42% | Yuan/Ton | |
| Cracked C5 Residue | National | 5453 | 5300 | 153 | 2.89% | Yuan/Ton |
| High-Olefin C5 | Northwest | 6999 | 6804 | 195 | 2.87% | Yuan/Ton |
| Gasoline (92#) | Dongying | 7811 | 7674 | 137 | 1.79% | Yuan/Ton |
Data source: Chempricehub Information
3. Future Outlook
Crude Oil: International oil prices are expected to have room for upside next week, with WTI potentially ranging between 76-82 USD/bbl and Brent between 81-87 USD/bbl. The core logic for this forecast is the renewed escalation of the US-Iran conflict, disruptions to shipping through the Strait of Hormuz, and a significant decline in oil tanker traffic, which prolongs market concerns over supply risks and supports oil prices.
Demand: The new round of wholesale and retail price limits for refined oil products is expected to rise. Therefore, positive news factors will act on the market. The refined oil market in Shandong is expected to remain firm. However, seasonal demand deficiency is leading to slow destocking of social inventory. Midstream and downstream players are mainly replenishing based on immediate needs, while refineries' marketing strategies are leaning towards maintaining profits. The forecast for next week is that gasoline and diesel prices from independent refineries in Shandong will first rise and then fall.
High-Olefin C5: The domestic high-olefin C5 market is expected to first rise and then fall next week. International oil prices have room for an uptick. The gasoline market is envisaged to trend up before declining. Currently, the overall tight supply of high-olefin C5 spot goods provides support, lending a strong tone to the market sentiment. However, end-users are resistant to high prices, and the momentum for further price chasing is insufficient. It is expected that the high-olefin C5 market in Northwest China will first rise and then fall next week, with limited room for movement in either direction.
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