China’s domestic naphtha market continued to rise in July

Price data

According to the latest monitoring data of business associations, the average price of mainstream refineries of domestic naphtha was 5995.00 yuan/ton as of July 31, up 8.02% from 5550.00 yuan/ton at the beginning of this month, and the price of refined naphtha continued to rise this month.

On July 31, the naphtha commodity index was 73.99, up 0.34 points from yesterday, down 27.90% from the peak of 102.62 points in the cycle (2012-09-24), and up 75.17% from the low of 42.24 points on July 19, 2016. (Note: Period refers to 2012-09-01 to date)

II. Analysis of Influencing Factors

Products: Refinery naphtha prices continued to rise this month. At present, most refineries have low inventories and less pressure on merchants to ship. At present, the mainstream price of hydronaphtha is around 5950 yuan/ton. The Asian naphtha cracking spreads rose for the fourth consecutive day on Wednesday, July 31, to $32.40 a tonne, the highest since July 15, as sustained demand underpinned the market.

Industry Chain: Upstream: According to the monitoring of business associations, WTI crude oil in the United States was 58.47 US dollars per barrel at the beginning of the month, 58.05 US dollars per barrel at the end of the month, with a weekly increase and decrease of -0.72%; Brent crude oil was 66.55 US dollars per barrel at the beginning of the month and 64.72 US dollars per barrel at the end of the month, with a weekly increase and decrease of -2.75%. Several factors, such as tension between the United States and Iraq, the Gulf of Mexico storm and worries about oversupply, affected the trend of international crude oil prices in July. Downstream: Sinopec suppliers increased demand in the middle of the month, the end of the month and August stockpiling has not yet started, downstream resistance to high prices. According to business associations, toluene market prices rose by more than 5% this month. At present, the mainstream price in East China is around 5,500 yuan per ton. The market price of xylene is firm and rising steadily. At present, the mainstream price in East China is around 5850-5880 yuan/ton. This month, due to the sharp decline in pure benzene port inventory and import volume, as well as the shortage of pure benzene supply in the United States, domestic pure benzene prices fell after a sharp rise this month, and the current price of pure benzene is 5000-5350 yuan/ton. In the PX market, the PX pre-maintenance device will be restarted soon, and the new device is planned to be put into production at the end of the month.

Industry: According to the price monitoring of business associations, in July 2019, there were 7 kinds of commodities rising annually in the energy sector, including 4 kinds of commodities with an increase of more than 5%, accounting for 25% of the monitored commodities in the sector; the top three commodities were MTBE (12.29%), diesel (8.34%) and gasoline (8.07%). There are 9 kinds of commodities falling annually, and 2 kinds of commodities falling by more than 5% accounted for 12.5% of the monitored commodities in the plate. The products of the first three declines were methanol (-9.55%), petroleum coke (-6.15%) and Brent crude oil (-2.75%). This month’s average rise and fall was 0.98%.

3. Future Market Forecast

Energy analysts from business associations believe that most refineries have low inventories and less pressure on merchants to ship. Sinopec suppliers will purchase demand in September and October in August. Refining naphtha prices are expected to rise in August, with the average price range of 5800-6300 yuan/ton.