Preface: In early July, high-olefin C5 prices in Northwest China fell from a high level. As of July 10th, the average price of high-olefin C5 in Northwest China was 6,841 CNY/ton, down 336 CNY/ton week-on-week, a decrease of 4.68%.
I. Recent High-Olefin C5 Market Prices Decline from High Levels
Recently, the spot market for high-olefin C5 in Northwest China has experienced a decline from high levels, with mainstream prices falling to 6,711-6,943 CNY/ton. During the week, under the influence of the US-Iran conflict, international crude oil prices rose. In the Shandong region, the gasoline market stopped falling and rebounded. Refineries took the opportunity to raise their quotes. However, end-users digested inventory slowly. After a brief restocking by downstream merchants, the market buying sentiment turned weaker. High-olefin C5 prices in Northwest China were previously at high levels, and downstream profit margins were inverted, forcing high-olefin C5 prices down. As crude oil and gasoline prices rose, the high-olefin C5 market stabilized and rebounded. Traders and downstream factories entered the market for operations, improving market buying sentiment.
II. Price Comparison of High-Olefin C5 Upstream and Downstream Prices
According to Chempricehub, by the end of June, high-olefin C5 prices in Northwest China had risen to a high level. The delivered price to downstream factories was significantly higher than that of end products. Traders and downstream players typically resist high prices, forcing high-olefin C5 prices to fall back.
Table 1: Price Comparison of High-Olefin C5 Upstream and Downstream
| Product Name | June 30th | July 9th | Change | Change (%) | Remarks |
|---|---|---|---|---|---|
| WTI Crude Oil | 70.75 | 73.52 | 2.77 | 3.92% | USD/barrel |
| Northwest High-Olefin C5 | 7259 | 6841 | -418 | -5.76% | CNY/ton |
| 92# Gasoline | 7693 | 7684 | -9 | -0.12% | CNY/ton |
| Hydrotreated Naphtha | 7618 | 7318 | -300 | -3.94% | CNY/ton |
Source: Chempricehub
III. Future Outlook
Crude Oil: It is expected that international oil prices will have room to rise next week, with WTI potentially between 70-78 USD/barrel and Brent between 74-82 USD/barrel. The core logic predicting next week's oil price trend is: the failure of the temporary US-Iran ceasefire agreement, renewed tensions, the risk of the Strait of Hormuz closing again, and increased geopolitical instability, all supporting oil prices.
Demand: The decline in the new round of refined oil retail price caps has narrowed. Therefore, the news factor will support the oil market. The refined oil market in the Shandong region is expected to temporarily slow its decline. Refineries will mostly focus on maintaining profit margins in sales. Midstream and downstream players will make moderate replenishments while reducing inventories, leading to acceptable market buying sentiment. It is expected that gasoline and diesel prices from independent refineries in Shandong will rise initially and then fall next week.
High-Olefin C5: The high-olefin C5 market is expected to rise initially and then fall next week. International oil prices have room to rise. The gasoline market trend is expected to rise first and then fall. With a bullish market atmosphere guiding sentiment and currently tight supply of high-olefin C5 spot cargoes, the domestic high-olefin C5 market is expected to first rise and then fall, with limited upside potential.
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