Oil Products: ARGUS China Gasoline index

The Argus China Gasoline Index (ACG)

The Argus China Gasoline index (Bohai) is a spot price assessed on a free on board basis for cargoes of 10ppm sulphur China 6 standard fuel loading at ports around northeast China’s Bohai Bay, home to the greatest concentration of Chinese independent refining capacity.

Product typically ships from northeast China, which is structurally long, to demand centres in east China’s Yangtze River Delta or south China’s Pearl River Delta markets.

Argus China Gasoline (Yangtze) is also based on deals — for the same quality cargoes — on an ex-tank basis in the Yangtze River Delta, at ports in Shanghai, Jiangsu and Zhejiang provinces.

Prices for both sets of assessments are expressed as outright values in $/bl exclusive of tax for comparison with international levels, and in Yn/t inclusive of tax for the domestic market.

Advantages of the Argus China Gasoline Index (ACG)

Independent, accurate reflection of Chinese prices

The Argus China Gasoline and the Argus China Diesel indexes are the first assessments for China’s 3mn b/d gasoline and diesel markets derived from actual transactions, as opposed to refiners’ posted prices. As such, they give a far more accurate representation of demand in the domestic market and how Chinese prices compare with internationally-traded cargoes.

While independent refiners do not have quotas to export gasoline or diesel, prices in the Bohai Bay reflect a clearing value for transport fuel in China’s oversupplied domestic market, and represent the price at which Chinese state owned companies can buy fuel for domestic sale or export.

Chinese spot prices trade independently of, and commonly diverge widely from, Singapore spot market prices — making the latter an unsuitable means of indexing physical sales or hedging spot trade in the Chinese market. Argus China Gasoline and Argus China Diesel price assessments provide market participants with a robust and transparent means to begin indexing sale or purchase agreements, and potentially paving the way for the development of paper markets.

Users of the Argus China Gasoline Index (ACG)

International oil analysts and traders can use Argus China Gasoline and Argus China Diesel spot prices to gauge China-Singapore export margins and domestic crack spreads. Domestic trading companies will be able to use Argus assessments as the basis for floating price sales between northeast China and east China.