With domestic oil prices in a downward spiral, Shandong's refining companies are facing severe financial challenges, with many operating at a loss. In response to this difficult situation, Sinopec recently took the lead in establishing China's first Fuel Oil Association. The initiative aims to unite oil companies and help them weather the "winter" together, moving away from the previous reliance on importing fuel oil alone.
Currently, refineries that have been allocated crude oil quotas are uncertain whether to celebrate or weep. He Weidong, general manager of a fuel oil sales company from Guangdong, joked, “We don’t know whether to laugh or cry.†Reports indicate that due to rising crude oil prices and stagnant refined oil prices, even those who managed to secure limited crude oil plans are now making losses.
Local refineries are particularly concerned because, although the price of imported fuel oil has dropped from last year’s peak, domestic diesel and gasoline prices have fallen even more sharply. “Not only is processing crude oil unprofitable, but even importing fuel oil is now causing losses,†said an executive from a Shandong-based refinery. The company confirmed that large-scale losses are now common in the region.
In this tough environment, the formation of the Fuel Oil Association is seen as a positive development. “Shandong is the largest fuel oil demand province in the country, with an annual demand of 22 million tons, while the national total is just 40 million tons,†said Sun Fuyong, president of the association.
Fuel oil, a byproduct of crude oil refining, is difficult to process, costly, and of lower quality. Local refineries in Shandong are not allowed to import crude oil directly and must rely on Sinopec for their crude oil allocations. This shortage of crude oil quotas forces many to import fuel oil instead, which not only increases costs but also creates artificial price inflation.
Sun Fuyong explained that smaller companies struggle to negotiate better prices due to low import volumes. The new association aims to provide a platform for resource sharing and market collaboration. More importantly, it will facilitate international trade negotiations with countries such as Russia, Venezuela, Brazil, Colombia, Indonesia, and oil fields in the Middle East and the North Sea. These efforts are expected to improve the allocation of petroleum and fuel oil resources in Shandong, stabilize supply, and reduce costs through group purchases.
Pressure Washing Machine
Pressure Washing Machine,High Pressure Washing Machine,High Pressure Cleaner,High Pressure Pump Wash Machine
Ningbo Senmiao Trading Co., Ltd. , https://www.nbsenmiao.com