[Chemical Knowledge]：What are the factors affecting the price of light circulating oil? Detailed analysis, how much is the price of light circulating oil per ton

Light Circulating Oil

Light Cycle Oil (LCO) is a by-product of the catalytic cracking unit in the refining process, and its main component is medium distillate oil, such as diesel oil and kerosene. Due to its higher aromatic content and lower cetane number, LCO is mainly used as a component in blending diesel and marine fuel oils. Therefore, the market demand and price of LCO are affected by many factors, including supply and demand dynamics, crude oil prices, substitute markets, policies and regulations, etc.

supply and demand relationship

The relationship between supply and demand is the core factor affecting the price of LCO. On the supply side, LCO production depends mainly on the operating rate of the refinery and the production capacity of the catalytic cracking unit. When refinery operating rates are high, LCO production increases and the market is well supplied, prices may move lower. Conversely, when refinery operating rates decline and LCO supply decreases, prices may rise. On the demand side, LCO demand is mainly driven by the diesel and marine fuel oil markets. When economic activity increases, diesel demand rises, driving LCO demand; conversely, during economic downturns, LCO demand falls and prices are depressed.

crude oil price

Crude oil price is one of the important factors affecting LCO price. The fluctuation of crude oil price directly affects the production cost of refining enterprises, thus affecting the production and market price of LCO. When crude oil prices rise, refining costs increase, and the price of LCOs may also rise. Crude oil prices also affect the overall price level of the global energy market, which in turn indirectly affects the market price of LCOs. In general, the fluctuation of crude oil price has significant transmission effect on LCO market price.

The Substitute Market

Alternatives to LCO mainly include other middle distillates such as diesel and heavy oil. When the prices of these alternatives change, the market price of the LCO is also affected. For example, when the price of diesel increases, the demand and price of LCO as a component of blended diesel may increase accordingly. On the contrary, if the price of heavy oil falls, the competitiveness of LCO will weaken, and its market demand and price may be suppressed. Therefore, the price fluctuation of the substitute market is one of the important factors affecting the price of LCO.

Policies and regulations

Policies and regulations also have an important impact on LCO prices. Changes in environmental policies and fuel standards may affect market demand and prices for LCOs. For example, the tightening of global sulfur emission standards for ship fuels (such as the IMO 2020 regulations) may increase the demand for low-sulfur fuel oil, which in turn will increase the market demand and price of LCO. Governments' energy policies, tax policies and subsidy policies may also indirectly affect LCO prices by affecting refinery production costs and market demand.

seasonal factors

The market demand and price of LCO also have certain seasonal characteristics. For example, increased demand for heating in the winter and rising demand for diesel led to higher LCO demand and prices. Increased demand for diesel fuel during the summer, with increased transportation and construction activity, could also push up LCO demand and prices. Seasonal overhaul and maintenance activities may result in lower refinery operating rates, affecting LCO supply and market prices.

economic cycle

The economic cycle has an important impact on LCO prices. During the economic boom, industrial production and transportation activities increased, and diesel demand rose, driving up LCO demand and prices. During the recession, industrial production and transportation activities decreased, diesel demand fell, and LCO demand and prices also fell. Fluctuations in the economic cycle indirectly affect the market price of LCO by affecting the supply and demand relationship in the diesel market.

International Market Factors

LCO market prices are also influenced by international market factors. Trade policies in international markets, exchange rate changes and geopolitical factors can all affect the price of an LCO. For example, international trade frictions may lead to restricted markets for LCO exports, oversupply and lower prices. Exchange rate changes can affect import costs and export earnings, which in turn affect the market price of LCOs. Geopolitical tensions can cause oil price volatility, indirectly affecting the price of LCOs.

Technical progress

Technological advances also have a potential impact on the LCO market. The progress of refining technology can improve the production efficiency of LCO and reduce the production cost, thus affecting the market price of LCO. For example, new catalytic cracking technology may improve the yield and quality of LCO, making it more competitive in the market. The development of fuel substitution technologies (such as biodiesel and electric vehicles) may also indirectly affect the market demand and price of LCO by replacing traditional diesel demand.

Conclusion

The price of light cycle oil is affected by a variety of factors, including supply and demand, crude oil prices, substitute markets, policies and regulations, seasonal factors, economic cycles, international market factors and technological advances. Understanding these factors and their interactions will help to more accurately predict LCO market price movements and provide market participants with a basis for decision-making. In a complex and dynamic market environment, continuous attention and analysis of changes in these factors is the key to grasp the LCO market opportunities.