Chinese refiners are set to cut crude throughput this month by about 6%, a scale last seen in the early days of the COVID-19 pandemic two years ago, to ease bulging inventories as recent COVID lockdowns undercut fuel consumption, reported Reuters with reference to industry sources and analysts.
Refiners are expected to lower crude oil processing in April by 3.7 MMt, or 900,000 bpd, equivalent to 6.3% of average national throughput in the latest annual figures, according to estimates by six industry sources and analysts.
Slowing demand at the world's top crude importer would help to cool global oil prices, which remain above USD100 after touching 14-year peaks last month, buoyed in part by supply disruption fears following Russia's invasion of Ukraine.
The slump in demand has also forced state refiners to export more fuel from their swelling inventories, countering government-led efforts to scale back overseas shipments after the Russia-Ukraine conflict stirred worries about supplies.
Companies are forecast to export approximately 2 MMt of gasoline, jet fuel and diesel combined this month, sources said, which could also allow Chinese refiners to reap the benefits of record Asian refining margins.
Customs data released on Wednesday showed that China's crude oil imports fell 14% in March from a year earlier. Imports had been pressured by deteriorating margins at small, independent refiners and by seasonal maintenance, and with the added impact of sliding demand, further declines are expected in April.
Chinese fuel demand took a sharp downturn in March when worsening coronavirus outbreaks were met by widespread lockdowns, including three weeks of mobility restrictions in Shanghai, China's largest city, to contain the highly contagious Omicron variant.
State refining giant Sinopec Corp, Asia's largest refiner, is leading this month's production cuts, lowering throughput by nearly half a MMbpd, followed by an estimated cut of 170,000 bpd by China's second-largest refiner, PetroChina, four sources familiar with the matter said.
As MRC wrote before, China plans to "steadily control" exports of some high carbon petrochemical products and will draw up a list of such goods, its industry ministry said, as the country strives to deal with climate change. China, the world's biggest GHG emitter, has cut export quotas of refined oil products such as gasoline and diesel to discourage plants from over-processing, as it has vowed to bring its carbon emissions to a peak by 2030.
We remind that China's state refiners are honoring existing Russian oil contracts but avoiding new ones despite steep discounts, heeding Beijing's call for caution as western sanctions mount against Russia over its invasion of Ukraine. State-run Sinopec, Asia's largest refiner, CNOOC, PetroChina and Sinochem have stayed on the sidelines in trading fresh Russian cargoes for May loadings, according to sources. Chinese state-owned firms do not wish to be seen as openly supporting Moscow by buying extra volumes of oil, after Washington banned Russian oil last month and the European Union slapped sanctions on top Russian exporter Rosneft and Gazprom Neft.
We also remind that amidst the ongoing conflict between Russia and Ukraine in Eastern Europe, key industry players are releasing announcements regarding their stand on this topic. From taking firm actions such as retracting services to provide humanitarian resources, there is a lot happening around the globe. In this curated piece, get a clear understanding on plastic additives industry’s take and the measures they are adopting that will alter the market trends and developments moving forward.
MRC