China's refining capacity to cross 19 mil b/d in 2024, throughput up 2% on year: ETRI

China's refining capacity would likely rise 2.7% year on year to 961 million mt/year in 2024, or 19.3 million b/d, exceeding the year-on-year growth in throughput that was estimated at 1.8%, according to a report by state-owned CNPC's Economics & Technology Research Institute Feb. 28.

Overcapacity in the refining sector would remain an issue despite the wave of capacity expansions ending, because China's demand for refined products is likely to peak at 400 million mt/year (8.67 million b/d) in 2024 or slightly later in 2025. The country needs to maintain heavy outflows of products to balance the domestic market, supplies of which would be 50 million mt over demand in 2024, the ETRI said.

The new refining capacity will mainly come from the greenfield 400,000 b/d Yulong Petrochemical in Shandong province and a 220,000 b/d expansion at Sinopec's flagship Zhenhai Petrochemical & Refining in Zhejiang province.

The private Yulong Petrochemical is expected to come on stream in the second half of the year at the earliest, according to market sources with close knowledge of the project development.

Sinopec Zhenhai's expansion and upgrading project with a new 1.5 million mt/year ethylene plant is scheduled to complete by year-end.

However, PetroChina's Dalian Petrochemical will phase out its No. 1 crude distillation unit (120,000 b/d), cutting the combined refining capacity to 290,000 b/d.

As a result, ETRI estimated the country's refining capacity to rise 500,000 b/d in 2024 from 18.8 million b/d in 2023.

PetroChina Dalian's No.1 CDU has been idled since October. It planned to move Dalian Petrochemical to the Changxing Island in the same city of Dalian to consolidate its overall capacity to 400,000 b/d from the current 410,000 b/d with a new 1.2 million mt/year ethylene plant.

ETRI expects China's ethylene capacity to increase 3.2 million mt/year to 55.15 million mt/year in 2024, after an expansion of 2.4 million mt/year in 2023.

All the new capacities will be using naphtha as feedstock, with around 68% to come from private companies.

The country's ethylene demand is likely to rise 6.7% year on year to 65.6 million mt this year, compared to a year-on-year growth of 4.9% in 2023.

Crude throughputs up 1.8%

ETRI expected Chinese refineries to process 752 million mt or 15.06 million b/d of crude in 2024, rising 1.8% year on year amid a slower demand growth than in 2023.

The country's crude throughput rose 8.6% year on year in 2023 to a new high of 738 million mt, or 14.82 million b/d, thanks to a rebound in oil products demand after tight COVID-19 controls, according to the ETRI. The throughput equaled to 78.9% of China's primary refining capacity.

In 2024, the bulk of the throughput increase will stem from new capacities at Yulong Petrochemical, Zhenhai Petrochemical and Guangdong Petrochemical, which started commercial operations since end-May last year, the ETRI said.

Guangdong Petrochemical plans to process about 19 million mt (380,000 b/d) of crudes in 2024, up 18.75% compared with a throughput of around 16 million mt in 2023, according to a close source with the refinery.

As a result, oil products output is estimated to rise 1.6% from 2023 to around 451 million mt in 2024.

ETRI projected domestic demand at 400 million mt for refining oil products in 2024, suggesting over 50 million mt of the products would need to find outlets overseas.