| The costs of an oil refining plant can be divided into two aspects: one is the crude-oil cost, and the other is the refining cost (full cost). The former one is the main costs, generally accounting for over 90% of the total costs. Today when China's refined oil prices haven't been adjusted by market in full scale, the price transmission is blocked, and even cut off by factitious factors.Since the year of 2003, the long-term oil prices have been rising with nearly the same breadth as the spot oil prices rose significantly, and this has never happened before. The situation indicates that the market participants believe that the factors leading to the continuing price rising at present has the character of long-term, and will not vanish within short-term. The popular opinion in the market is consistent with our analyzing on the trend of oil price. According to the oil prices in long-term, the market believes that the central line of the axis of oil price fluctuating in future may lies between $45 and $55, which is one time more than the previous axis of $20. It's estimated that the times of $10 to $20 per barrel in 90 years has gone and will never back again. According to the crude oil prices at present and the judgment that the international crude oil price will decline slowly, the estimation says that Brent's crude oil prices will be at $48 per barrel in 2007 and $40 per barrel in 2008.Another element which also affects crude oil prices is oil quality: API(measuring weight) and sulfur content. There are great price gaps between crude oils different in quality. For example, during Oct.2004, Brent's light oil is $11 per barrel higher than Dubai's heavy oil. Though the refining costs for heavy crude oil are a little bit higher, the profits of heavy oil refining plants will be significantly higher than that of light oil refining plants when the price gap between light oil and heavy oil is enlarged over $ 2.The newly-formed crude oil refining capacity has characters of weighting and higher sulfur, which together upgrade refining gross profits, and meanwhile leads to two results: first, further enlarge the gap between Brent's prices and Dubai's prices. Second, it will definitely set high requirements on twice-refining capacity of refining plant. To meet the requirements on the quality of refined oil products, more twice refining capacity is needed when crude oil of poor quality is used as material. Globally, the bottleneck of twice-refining capacity has become an important factor that is limiting supplying.By analyzing the investment cycle and costs of refining industry, with the fact that newly-formed supplying falls behind the market demand, we can say that the world refining industry will meet their golden age, in which the refining gross profits will rise largely, and even be further improved by upgraded quality standards on oil products. The opinion of the future market is that the lowest price gap for oil products will be above $12 in the future 12 months.Status of China's refining industry: the excessively small enterprises on average, the comparatively high costs for building new plants, and much intensive operation rate from 2005 and 2007. To build a environmental-friend new plan, an investment of 8000~10000 dollar is needed for the refining capacity of 1 barrel per day, and 160 million dollar for 100 million tons per year, and 3.2 million billion dollar for 20 million tons per year. Assuming that the operation fee for the future refining plants reaches to $1 per barrel, the refining gross-profits should, at least, be $5 per barrel when recovery period is 15 years and discount rate is 10%. Only if a comparatively high gross-profit is achieved, could a corresponding returning rate be reached.As we all know, our refined oil prices mechanism has following disadvantages: it can only accepts passively the changes in international oil prices, while is unable to reflect the changes of oil supply-demand and of consuming structure in internal market, let it go to feed back to international market, in form of price, the changes of China's oil market. On the contrary, such changes are usually predicted by international market, thus become the scapegoat of risk premium in international oil market. The passive condition also leads internal oil-importation into the vicious cycle of"more buy, more lose".By comparing refined oil prices between China and USA, we can find that the Ex-retail price gap in China is higher than that in USA. This explains china, compared with USA, focus more on distribution section when dividing profits. As consumer's affordability gets stronger, the calls for rising prices for refined oil will gain supports at policies level.RMB's appreciation will further improve the refining gross-profits. It's hard to foretell the ultimate level of exchange rate which is under influence of the dollar's future toward, the domestic economic status and the international political factors. With the speculation based on the effective changes of RMB's exchange rate level in history and by considering in general the influence the domestic economic status has, we can say that it's possible for exchange rate between RMB and USD to appreciate by total 5~10 % in the future two to three years.The other advantage of RMB's continuing appreciation is that while domestic nominal prices for fuel keep unchanged, the gap between domestic and aboard refined oil prices will constantly gets narrow. When the costs fall, such trend will definitely actuates China's refining gross profits keep back with that aboard (in USD).Under the influences of the five favorable factors of the upsurge of international refining gross profits, the falling of international crude oil prices, the lacking of domestic refining capacity, the market reformation of the refined oil prices and RMB's continuing appreciation, China's refining industry will ultimately come into golden era!... |
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