CHINA DATA: August crude throughput to recover amid less refinery maintenance

China's overall crude throughput is set to recover in July and August after reaching a six-month low in June as scheduled refinery maintenance winds down, but throughput levels will remain lower on the year amid weak domestic demand, sources and analysts told S&P Global Commodity Insights on July 30.

This weakened demand is expected to continue weighing on the country's annual crude throughput for the year. In the first half of 2024, throughput levels declined 0.9% on the year to 14.5 million b/d, according to data from the National Bureau of Statistics.

In July, China's combined throughput -- which includes state-run refineries and mega private plants -- reached 10.23 million b/d with an 83% utilization rate, lower than the 10.41 million b/d needed to run at 85.6% capacity a year ago, data collected by Commodity Insights showed.

In June, these refineries ran at 80.6%, processing 9.94 million b/d of crude.

Meanwhile, the operating rate at China's small independent refineries edged up to 53% in July from a four-year low of 52% in June, although this was still significantly below the 62% in July 2023, according to local information provider JLC.

Shandong's independent refineries typically serve as a key indicator of China's oil demand, as they operate autonomously from state-owned entities in the refining sector.

"The month-on-month recovery in July is more likely due to refineries resuming operations from maintenance rather than demand improvement," a Beijing-based source with Sinopec said.

Throughput in August is expected to increase further from July levels as Dushanzi Petrochemical, Qilu Petrochemical, Maoming Petrochemical and Dalian Wepec resume normal operations, sources said.

This comes even as a combined 420,000 b/d of refining capacity from state-owned refiners PetroChina and Sinopec going offline in August for scheduled maintenance, which includes refineries that will be shut in the month as well as those with ongoing maintenance that began in previous months, Commodity Insights data showed.

This offline capacity in August can still help sustain China's crude throughput to some extent, as it is much lower compared with 930,000 b/d in July and 1.34 million b/d in June.

Meanwhile, China will likely export 3.27 million mt of clean oil products in August, slightly up from the estimated 3.19 million mt in July, market sources said, adding that this will also support the country's throughput levels.

China typically ramps up its throughput in August to prepare for the peak demand season in the following two months, but this increase might face a setback due to slower-than-expected domestic demand, market sources said.

State refiners' utilization rate recovers

The average utilization rate at 50 state-owned refineries grew to 80% in July, compared with a 22-month low of 78.4% in June and a 12-month low of 78.7% in May, Commodity Insights data showed.

The survey covered 26 Sinopec refineries, 22 PetroChina refineries and CNOOC's Huizhou Petrochemical, as well as Sinochem's Quanzhou Petrochemical.

These refineries -- which have a total capacity of 10.8 million b/d -- plan to process a combined 8.6 million b/d of crude in July.

PetroChina kept its run rates largely stable at around 74.3% in July, compared with 74.2% in June, as its Ningxia Petrochemical was shut for maintenance in early July, offsetting the throughput uptick from Dushanzi Petrochemical's restart.

Sinopec lifted its utilization rate to around 81.9% in July from a 22-month low of 78.9% in June.

The other two state refiners, CNOOC's Huizhou Petrochemical and Sinochem's Quanzhou Petrochemical, were operating at relatively higher run rates in July, at 102% and 94%, respectively.

Private refiners' utilization rate higher

The utilization rate at private refineries was kept relatively higher compared with their state-owned peers.

Hengli Petrochemical (Dalian) Refinery was operating at around 98% of capacity in July, up from around 71% in June, when the refinery completed overall maintenance, while the 800,000-b/d ZPC upped its run rate to around 108% in July, from 105% in June.

The 320,000-b/d Shenghong Petrochemical lowered its operating rate to around 103% in July, compared with 106% in June.

The utilization rate at smaller independent refineries in China's eastern Shandong province was also marginally higher in July, amid slightly improved refining margins.

JLC data showed that the average utilization rate at China's eastern Shandong province was around 53.1% as of July 24, up from June's average of around 52% -- the lowest since March 2020, when the country was struck by the pandemic.

Average utilization rate at China's top refineries:

Chinese refineries' maintenance schedule:

Source: S&P Global Commodity Insights