CHINA DATA: April crude runs to hit two-year low on COVID-19 resurgence

China's crude throughput is set to reach a two-year low in April as state and independent refiners have slashed runs because of the latest COVID-19 resurgence that has hurt the country's appetite for oil products when refineries are undergoing scheduled maintenance, data from S&P Global Commodity Insights showed April 26.

April run rates at the country's four state-owned refiners fell to 76.4%, the lowest since 76.1% in April 2020, according to S&P Global data, while private integrated refineries also cut throughout.

Shandong independent refineries' utilization rate dropped to a two-year low of 50.1% as of April 20, data from local information provider JLC showed.

China's crude throughput averaged 13.85 million b/d in March, down 2% year on year, according to the latest National Bureau of Statistics data.

S&P Global has estimated China's second-quarter throughput, including other feedstocks, to fall 4% year on year to 14 million b/d.

The reduction in April throughput is because of a drop in demand following tight movement controls in more than 18 provinces and cities amid Beijing's zero-tolerance toward COVID-19, rather than scheduled maintenances at some Sinopec refineries, sources said. That is also a result of a relatively narrow outlet for product exports, according to sources.

S&P Global data covered 46 state-owned refineries in April, compared with 48 in March, including 25 Sinopec refineries, 19 PetroChina refineries, CNOOC's Huizhou Petrochemical and Sinochem's Quanzhou Petrochemical refinery.

These refineries will process a combined 7.6 million b/d of feedstock in April, against combined capacity of 9.95 million b/d.

Sinopec leads the cuts

Sinopec's refineries, which are located mostly along the coastal cities, have been hit by weak demand. About 18 of 25 Sinopec refineries surveyed by S&P Global in April have cut their throughput by one to 16 percentage points. Most of these refineries have lowered their throughput more than once in April.

The other three state refiners -- PetroChina, Sinochem and CNOOC -- have cut their April throughput by about one to three percentage points.

Some Sinopec plants cut their throughput to minimum levels with several secondary units shut. The 12.5 million mt/year Qilu Petrochemical was operating at a minimal utilization of 78%. It was difficult for the refinery to lower the rate further with two of its secondary units shut following an explosion on April 24, S&P Global reported earlier.

Three Sinopec refineries with a total capacity of 29 million mt/year are undergoing maintenance from early March to May.

Sinopec's average run rate has fallen eight percentage points to about 76% in April, from March, according to company sources.

"It's still unclear about the COVID-19 controls in May, as the recent wave in Beijing has caught attention," said a Beijing-based analyst, who was concerned that lockdowns might expand to more Chinese cities.

But fewer refineries will be under maintenance in May, partly easing the pressure to further reduce throughput, the analyst said.

PetroChina has cut its run rate to 74% in April, from 75% in March, due to weak demand and a lockdown in the Jilin province in Northeast China.

Of the 19 PetroChina refineries surveyed by S&P Global in April, 13 refineries have cut run rates by about one to nine percentage points from March.

"The stocks of gasoil and gasoline has been relatively high in general, especially gasoline," said a PetroChina refinery source in Northeast China.

Sinochem's Quanzhou Petrochemical cut its run rates to about 90% in April, from about 93% in March, company sources said.

Independent refiners turn cautious

Shandong independent refineries utilization rate was last lower at 43.8% in February 2020 when the first COVID-19 wave hit China, according to JLC. The run rates at the refineries averaged 55.7% in March.

Private sector utilization at the integrated Hengli Petrochemical (Dalian) dropped to about 70% in April, from 102% in March, with maintenance postponed to the second half of 2022, company sources said.

Zhejiang Petroleum & Chemical cut its run rate to about 80% in April, from 88% in March, after it shut one of its four 10 million mt/year crude distillation unit.

"Refiners are generally very cautious to run at low utilization, despite refining margins is improving slightly as gasoil sales increased," said an analyst with JLC.

State-owned refineries maintenance schedule

• Sinopec's 9.5 million mt/year refinery Hainan Petrochemical undergoing maintenance over March 15-May 10
• Sinopec's 14.5 million mt/year refinery Yangtze Petrochemical undergoing maintenance over March 15-May 28
• Sinopec's Tahe Petrochemical to restart its 5 million mt/year refinery early May, following a 45-day maintenance that started March 16
• PetroChina's 6 million mt/year Karamay Petrochemical to shut for maintenance from late May to early July
• PetroChina's 3.7 million mt/year Qingyang Petrochemical to shut for maintenance from late May to mid-July
• PetroChina's 2.5 million mt/year Yumen Petrochemical to shut for maintenance from June to mid-July
• PetroChina's 5 million mt/year Hohhot Petrochemical to shut for maintenance from mid-July to mid-September

AVERAGE RUN RATES AT CHINA'S TOP REFINERS:

Source: S&P Global Commodity Insights