SunSirs: China Domestic Gasoline and Diesel Prices Trend Downward in April

According to the SunSirs Commodity Market Analysis System, gasoline and diesel prices at independent refineries in Shandong province trended lower in April. By the end of the month, the domestic price for 92# gasoline stood at 7,983 RMB/ton—a decline of 15.87% for the month. Meanwhile, the domestic price for 0# diesel was 7,268.14 RMB/ton—a decline of 12.59% for the month.

Core Driver: International Crude Oil Prices Decline in Early-to-Mid April

In the first half of April, crude oil prices retreated. The primary driver was a rapid shift in market sentiment: the "geopolitical conflict premium" that had previously buoyed prices gave way to expectations of diplomatic de-escalation, compounded by bearish fundamental factors. A confluence of four key elements—signals of renewed talks between the U.S. and Iran, the partial resumption of shipping traffic through the Strait of Hormuz, the IEA lowering its supply-and-demand forecasts, and a massive surge in API crude oil inventories—caused the risk premium built into oil prices to dissipate rapidly, resulting in a downward trend in the crude oil market. Furthermore, weak global demand—coupled with concerns that escalating geopolitical conflicts could drag down economic growth and oil consumption—pushed the crude oil market significantly lower. Although the crude oil market staged a rebound in late April due to setbacks in diplomatic negotiations, the domestic refined oil market as a whole experienced a substantial decline throughout the month.

Domestic Supply Side: Refinery Resumption & Inventory Accumulation

In April, domestic refineries resumed production en masse; processing volumes remained at high levels, leading to an increase in refined oil output. The operating rate at independent refineries in Shandong province hovered around 60%, ensuring an ample supply of refined oil products in the domestic market. Moreover, domestic inventories of gasoline and diesel continued to climb; by mid-April, stock levels at both independent Shandong refineries and major state-owned refineries had reached the upper end of their annual range, creating pressure that forced prices downward.

Market Demand: Demand Remains Weak; Buyers Exercise Caution

In April, "rigid demand" (essential consumption) for gasoline from private vehicles remained stable, showing no significant growth; meanwhile, the continued rise of new energy vehicles continued to displace and erode gasoline consumption. The recovery of the industrial, infrastructure, and logistics sectors fell short of expectations; low project commencement rates resulted in weak diesel demand, placing significant pressure on refineries to move their inventory. Traders and gas station operators lacked confidence in the near-term market outlook, opting to purchase strictly on an "as-needed" basis to mitigate the risks associated with holding high inventory levels. Consequently, market trading activity remained sluggish, and both gasoline and diesel prices trended downward under the weight of these demand-side pressures. Market Outlook: Key attention remains focused on negotiations regarding geopolitical tensions in the Middle East. Shipping through the Strait of Hormuz currently remains at a standstill; should the conflict in the Middle East persist over the long term, it would not only drive a sustained rise in oil prices but also exacerbate global inflationary pressures, thereby dragging down global economic growth. In the short term, crude oil prices are expected to experience significant volatility. Domestically, refinery utilization rates are expected to remain largely unchanged in the near term, and supplies of refined oil products remain normal; consequently, the market for gasoline and diesel is projected to exhibit short-term volatility in the period ahead.

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