MOSCOW (MRC) -- China’s refinery crude throughput remained near two-year lows in August due to outages at several state refiners and independent plants which curbed production amid thinning margins and tepid demand, said Reuters.
Refiners processed 53.66 million tonnes of crude oil last month, 6.5% less than a year earlier, according to data from the National Bureau of Statistics (NBS) on Friday. That is equivalent to 12.64 million barrels per day (bpd), which was a touch higher than 12.53 million bpd in July but still among the lowest processing levels since early 2020.
Throughput in the first eight months was 434.89 million tonnes, down 6.3% on a year before and equal to about 13.06 million bpd. China’s fuel demand has been hit hard this year as Beijing’s tough COVID-19 control measures stifled mobility and economic activity, with analysts predicting the first annual contraction in oil demand in two decades.
Affecting August output, Sinopec Shanghai Petrochemical Corp’s 320,000-bpd crude facility only resumed partial operation in mid way through the month after more than seven weeks’ of unplanned shutdown.
And PetroChina Wepec’s 200,000-bpd plant only resumed operation in late August after nearly a three months’ outage. Meanwhile, operations at independent refiners in the eastern refining hub of Shandong averaged at just under 65% of capacity in August, down from 70% in July, according to Chinese commodities consultancy JLC.
Independent plants faced policy headwinds with Beijing launching a new tax probe that is set to squeeze their profit margins. Friday’s NBS data showed China’s crude oil production last month slipped 0.2% from a year earlier to 16.94 million tonnes, with daily output at 3.99 million bpd.
Crude oil production in the first eight months rose 3.2% from a year earlier to 136.94 million tonnes (4.11 million bpd). Natural gas production was up 6.3% in August on the year at 17 billion cubic meters. Year-to-date production was up 5.5% at 143.7 bcm.
We remind, crude oil refining capacity has shrunk by a record 3.8 MM barrels per day from March 2020 to mid-2022 as demand expanded, setting the stage for fuel markets to remain very tight until at least mid-decade. The fall in capacity comes as oil demand rose by 5.6 MMbpd over the same period, the report released on Tuesday said. At the same time, about 2 MMbpd of net capacity is expected to come online by the end of 2023, with delays to these timeline likely to arise, the report said. "This puts pressure on all available refining capacity to run at high utilization levels to keep up with demand." Oil product markets experienced sharp upheaval since the COVID-19 pandemic was declared in March 2020.