kerosene

Kerosene Recent Commodity Market Dynamics Intelligence

I. International Market Dynamics
1. Price Trends
- Europe and US Markets: Driven by a rebound in winter heating demand, European kerosene prices rose 2.3% week-on-week. US kerosene futures prices increased by 1.8% due to expectations of declining inventories.
- Asia-Pacific Market: Singapore kerosene spot prices remained stable in the $85–$87 per barrel range, with Indian demand supported by increased seasonal agricultural oil usage.

2. Supply and Demand Changes
- Supply Side: Following the completion of refinery maintenance in the Middle East, kerosene production increased by 5% month-on-month. However, Russian exports to Europe decreased by 10% due to logistics constraints.
- Demand Side: Cold waves in the Northern Hemisphere boosted aviation kerosene demand. As the global aviation industry recovered to 85% of pre-pandemic levels, kerosene consumption rose by 3.2% month-on-month.

3. Geopolitical Impact
- The ongoing Red Sea shipping crisis has reduced kerosene transit through the Suez Canal by 15%, increasing landed costs in Europe.
- Escalating US sanctions on Russian petroleum products have led some European buyers to shift procurement to the Middle East, exacerbating regional supply and demand tensions.

II. Domestic Market Dynamics
1. Price Trends
- The average domestic kerosene ex-works price rose 1.5% week-on-week to RMB 6,800 per ton. The East China region led the increase (+2.1%) due to low port inventories.
- Retail Market: The markup for aviation kerosene expanded to RMB 500 per ton, reflecting pressure from international crude oil cost pass-through.

2. Supply and Demand Changes
- Supply Side: Major refineries maintained an operating rate of 82%, while local refineries reduced production by 3% due to compressed margins. Overall supply decreased by 1.8% month-on-month.
- Demand Side: Winter heating oil demand increased, with industrial kerosene consumption in northern regions rising 5% month-on-month. However, demand in southern regions remained subdued due to higher-than-average temperatures.

3. Policy and Logistics
- Import Tariff Adjustments: China has implemented temporary import tariff reductions for low-sulfur kerosene, with December import volumes expected to increase by 10% month-on-month.
- Logistics Costs: Coastal freight rates rose by 12% due to cold waves, inhibiting resource allocation efficiency across certain regions.

III. Related Commodity Linkage Effects
1. Crude Oil Market
- Brent crude prices broke through $85 per barrel, supporting kerosene cost fundamentals. However, expectations of a loosening OPEC+ production cut agreement have limited the upside potential.
2. Alternative Energy
- LNG prices fell by 8% due to sufficient European inventories. Some industrial users have switched to natural gas, curbing the growth potential for kerosene demand.

IV. Analysis, Judgments, and Forecasts
1. Short Term (1–2 Weeks)
- Prices: International kerosene prices are expected to remain in a high-range consolidation ($85–$90 per barrel), supported by cold waves and shipping bottlenecks. Domestic prices may rise slightly to RMB 6,900–7,000 per ton due to cost pass-through and low inventories.
- Supply and Demand: Northern Hemisphere heating demand will persist, but increased Middle Eastern supply will partially offset the reduction from Russia, maintaining a tight global supply-demand balance.

2. Medium Term (1–3 Months)
- Prices: If the Red Sea crisis eases, European kerosene prices may fall by 5%–8%. Pre-Spring Festival stocking demand in China could push prices to around RMB 7,100 per ton.
- Supply and Demand: Expectations of US Strategic Petroleum Reserve releases and refinery spring maintenance schedules may increase supply pressure. Demand-side trends will depend on the sustainability of the aviation industry recovery.

3. Risk Factors
- Escalation of geopolitical conflicts leading to supply chain disruptions;
- Extreme weather impacting refinery production or logistics;
- Significant volatility in crude oil prices causing cost-side shocks.