CHINA DATA: State refiners cut runs to 81% in March amid maintenance

China's crude throughput in March is set to be lower than in February as state refiners cut operating rates for scheduled maintenance, while independent refineries further lower throughput due to weak refining margins and sluggish demand amid a domestic COVID-19 resurgence, latest data from S&P Global Commodity Insights showed March 25.

The country's crude throughput averaged 14.04 million b/d over January-February, according to National Bureau of Statistics data.

The average utilization rate at China's four state-owned refiners has fallen to around 80.9% in March from a three-month high of 82.7% in February, despite being two percentage points higher than the 78.7% utilization rate a year earlier.

Sinopec is the leading contributor to the utilization fall in March, with 564,000 b/d of its refining capacity shut since mid-March for scheduled maintenance. These refineries are Yangzi Petrochemical, Hainan Petrochemical and Tahe Petrochemical.

PetroChina in April will shut its 110,000 b/d Liaohe Petrochemical refinery for maintenance, while the turnaround at its 200,000 b/d Huabei Petrochemical has been postponed to August from the initial plan of April, S&P Global data showed.

However, the outages in March and April are expected to be lower than in the same period last year, when about 800,000 b/d and 1.7 million b/d of capacity respectively was offline for scheduled maintenance.

Oil product yield higher

China's refineries have also flipped their production strategy in recent months to boost oil product output as petrochemical demand slows and profit margins for the latter narrow.

"We have been cutting petrochemical yields since February as their price hike is much slower than that of oil products," a Sinopec refinery source said.

Sources with PetroChina said they had adopted the same strategy.

This will help China to sustain oil product output when both state-owned and independent refineries cut runs.

China raised its oil product output yield in the first two months of the year by 10 percentage points from a year earlier to 76.5% as petrochemical demand slowed, NBS data showed.

S&P Global data covers 48 state-owned refineries in March, compared with 45 in February. It include 26 Sinopec refineries, 20 PetroChina refineries, CNOOC's Huizhou Petrochemical and Sinochem's Quanzhou Petrochemical refinery.

These refineries will process a combined 8.3 million b/d in March, against their combined capacity of 10.26 million b/d.

The combined capacity of the 26 Sinopec refineries polled is 5.6 million b/d, accounting for 92% of the company's total capacity, while the 20 PetroChina's refineries represent a combined capacity of 3.9 million b/d, accounting for 95% of the oil giant's total capacity.

Independent refineries cut further

Independent refineries in Shandong province are likely to trim their average utilization rate to 56% in March from 66% in February, according to a local energy information provider JLC.

"High crude prices and slow demand amid pandemic lockdowns in March are squeezing independent refineries' margins further," a Shandong-based analyst said. Some refiners may even resell their crude cargoes to peers as they trim throughput, the analyst added.

Their weekly average run rate has hit 53% March 23, down from 55%-56% a week earlier, the JLC data showed,

Moreover, the 400,000 b/d Hengli Petrochemical (Dalian) and 800,000 b/d Zhejiang Petroleum & Chemical refinery complexes are likely to cut their throughput in April due to poor petrochemical margins, despite their runs in March being stable from February.

Hengli Petrochemical is operating at around 102% of its capacity in March, compared with 103% in February. ZPC has slightly lifted its utilization to 89% in March from 88% in February, according to refinery sources.

State-owned refineries maintenance schedules:

** Sinopec's Hainan Petrochemical shut the 9.5 million mt/year refinery March 15 until May 10 for overall scheduled maintenance

** Sinopec's Yangtz Petrochemical shut the 14.5 million mt/year refinery March 15 until May 28 for scheduled maintenance

** Sinopec's Tahe Petrochemical shut the 5 million mt/year refinery around March 16 for 45 days' scheduled maintenance

** PetroChina's 5.5 million mt/year Liaohe Petrochemical will shut for maintenance over April-June

** PetroChina's 6 million mt/year Karamay Petrochemical will shut for maintenance over late May-early July

** PetroChina's 3.7 million mt/year Qingyang Petrochemical will shut for maintenance over late May to mid-July

** PetroChina's 2.5 million mt/year Yumen Petrochemical will shut for maintenance over June to mid-July

** PetroChina's 5 million mt/year Hohhot Petrochemical will shut for maintenance from mid-July until mid-September

Average run rates at China's top refiners:

Source: S&P Global Commodity Insights