CHINA DATA: Shandong independent refiners' throughputs hit 26-month low

Feedstock consumption at Shandong's independent refineries continued to fall and hit a 26-month low in April amid weak refining margins, data form local information provider JLC showed on May 12.

The volume fell 9.1% from March to 7 million mt, which was also a six-month consecutive fall since November 2021.

The weak refining margins resulting from high crude prices and weak sales of oil products hurt the overall run rates in April, JLC said.

The theoretical refining losses from processing imported crudes were around Yuan 224 ($33.32)/mt, compared to a loss of just Yuan 1/mt a month earlier, according to JLC's calculation.

As a result, a combined refining capacity of around 45 million mt/year was shut down in April, after the resurgence of COVID-19 cases in the country.

"Refineries have started to lift throughputs and restarted maintenance from late-April," said an analyst with JLC.

Starting from second-half April, Shandong independent refineries have lifted crude throughputs with margins getting better amid easing of COVID-19 restrictions in the province.

Accordingly, stocks of gasoil and gasoline also declined. Gasoline stocks dropped 28.9% month on month to around 430,000 mt, while gasoil stocks eased by 37% from March to 540,000 mt.

This was mainly due to the improving demand in driving, while demand for gasoil from construction projects have been slightly better.

In May, around five independent refineries are expected to restart from maintenance gradually, which will help boost throughputs. These include Shangneng Petrochemical, Lianhe Petrochemical, Tianhong Chemical.

In the first week of May, the weekly run rates at the surveyed 40 independent refineries were at around 53.2% as of May 5, about 1.6 percentage points higher from the week earlier, according to JLC.

Port stocks high

The expected uptick in May refinery runs could also find some support from high port stocks of feedstock in Shandong.

Combined feedstocks stocks at Shandong ports increased marginally by 0.4% from end-March to 7.76 million mt as of April 28, the highest since August 2021, data from JLC showed.

"The port stocks are still relatively high, especially as Rizhao port helps sustain the operations at refineries despite of lower imports," said the analyst with JLC.

Shandong-based independent refineries received 8.4% less feedstocks in April at 6.74 million mt compared with March shipments, according to S&P Global data.

JLC's survey covers 40 independent refineries in Shandong, with a combined capacity of 159 million mt/year, accounting for about 17% of China's total refining capacity.

ZPC & Hengli

Not only Shandong independent refineries, but also integrated refining complexes cut throughputs in April, amid weak demand.

Zhejiang Petroleum & Chemical and Hengli Petrochemical (Dalian) Refinery, cut their daily crude throughputs further by 21.8% from March, to process a combined 814,000 b/d of crude in April, according to JLC.

The two refining complexes have suffered from weak margins for producing petrochemical products, which were even worse hit than oil products.

Both ZPC and Hengli trimmed run rates in April. ZPC has been operating three out of its four crude distillation units, while Hengli still plans to shut one of its CDUs for maintenance, according to market sources.

Shandong independent refineries' crude feedstocks ( '000 mt)

Shandong independent refineries' Oil product output, sales ( '000 mt)

Shandong independent refineries' top crude feedstocks ( '000 mt)

Source: JLC