CHINA DATA: May crude throughput unlikely to rebound amid maintenance, weak demand

Crude throughputs at China's refineries are less likely to see a strong recovery in May from a four-month-low in April, amid heavy refinery maintenance coupled with weak demand for oil products, refinery sources told S&P Global Commodity Insights May 28.

China's crude throughput fell to 14.36 million b/d (58.79 million mt) in April with the first monthly year-on-year decline since August 2022, at 3.3%, latest National Bureau of Statistics data showed.

In May, a combined capacity of 1.9 million b/d has been offline for maintenance, including those shut from April and those newly shut in the month, S&P Global data showed.

The shut capacity rose from 1.32 million b/d in April, with the a combined 580,000 b/d crude distillate units turned off in the second half of May from PetroChina's Dushanzi Petrochemical, and Sinopec's Qilu Petrochemical as well as Maoming Petrochemical.

Some secondary units are also offline for turnaround, such as Sinopec Shanghai shutting 1.95 million mt/year of its residual hydrotreater in May which also pulled down the throughput month on month.

Meanwhile, refiners said slow domestic gasoil demand has also capped the throughput.

Several refining sources with Sinopec in east China said gasoil sales have been weaker than expected due to slow pace of construction in infrastructure projects, and the replacement of heavy-duty gasoil trucks by LNG trucks. "Gasoil demand has peaked already," one of the Sinopec sources said.

China's commercial gasoil inventory remained hovering above 16 million mt, despite edging down 0.61% week on week as of May 23, data from local information provider OilChem showed.

Gasoil is the top oil product by volume in Chinese refineries, yield of which accounted for 28.7% of their crude throughput over January-April despite falling from 29.8% a year earlier, NBS' latest data showed.

Runs at state-owned plants fall to 12-month low

As a result, the average utilization rate at 51 state-owned refining plants stood at a 12-month low of 78.70% in May, falling from the 80.9% in April and a six-month high of 83.4% in March, S&P Global data showed. The previous low was 78.65% in May 2023.

The May survey covered 27 Sinopec refineries, 22 PetroChina refineries and CNOOC's Huizhou Petrochemical, as well as Sinochem's Quanzhou Petrochemical. Those refineries planned to process a combined 8.72 million b/d of crude, against their capacity of 11.1 million b/d.

PetroChina trimmed its run rates to 73% in May from 74% in April, while Sinopec also cut the utilization by three percentage points from April to 81% in May.

But the downside was capped as 24 state-owned refiners raised throughputs in May, compensating the sharp declines at the refineries under maintenance.

Those include 16 from Sinopec and 7 from PetroChina, out of the total 51 surveyed refineries, that have raised their May utilization rates by at least one percentage point from a month earlier, according to S&P Global data.

Meanwhile, the oil giants keep reducing their gasoil yield to lift jet fuel and gasoline production, as demand for the two transportation fuels was boosted by road and air traveling amid the holiday season in early May.

NBS data showed China's jet fuel production rising 33.7% year on year to 1.26 million b/d in January-April, while the gasoline output gained 6.7% to 3.88 million b/d.

Private refiners slightly boost runs

Meanwhile, the utilization rate at private refining complex was slightly higher as the 800,000 b/d Zhejiang Petroleum & Chemical restarted from scheduled maintenance in May and boost utilization to around 103% from 87.5% in April.

The utilization rate at Hengli Petrochemical (Dalian), however, has remained low at around 60%, compared with 59% in April, as the scheduled maintenance at its two CDUs, 200,000 b/d each, will not be finished untill June, according to sources.

The 320,000 b/d Shenghong Petrochemical, however, raised its utilization rate by two percentage points to 103% in May, according to market sources.

In addition, the utilization rate at small-sized independent refineries in China's eastern Shandong province was slightly higher amid improved refining margins, which was attributed by the falling crude benchmarks.

Data from local energy information provider OilChem showed that the average utilization rate in the past few weeks in May was around 55.9%, which was one percentage point higher from 54.8% a month earlier.

Average utilizations at China's top refineries:

Source: S&P Global Commodity Insights, OilChem