CHINA DATA: Shandong independent refiners' throughput rebounds to 4-month high in May

Feedstock consumption at Shandong's independent refineries rebounded to a four-month high of 8.18 million mt, or 1.93 million b/d, in May amid restarts from maintenances, with the level expected to be stable in June.

The volume in May jumped 16.9% from the 26-month low of 7 million mt in April, ending a consecutive three-month fall, data from local information provider JLC showed on June 13. However, the volume was still 18.6% below the 10.05 million mt in the same month of last year, the data showed.

The rise was due to a combined 22.1 million mt/year, or 442,000 b/d, of refining capacity from six independent refineries resuming operation from maintenance in May. However, refining margins in the sector were too thin to boost throughput further.

According to JLC's calculation, the theoretical refining losses from processing imported crudes widened to Yuan 352/mt ($52.4/mt) from Yuan 224/mt ($33.4/mt) in April.

"Quite a lot of refineries started to crack relatively cheap Russian crudes. But the overall costs were high due to rising benchmark prices, deepening refineries' losses," said an analyst with JLC.

Independent refineries in Shandong have increased their crude imports that are originally from Venezuela, Iran and Russia, which were taken in discounts.

"Except a few refineries that stick to those regular crudes from the Middle East, West Africa or South America, most independent refineries now live on those cheap feedstocks," the analyst added.

But the high outright crude prices thinned refining margin, while high oil products prices also dampened demand and slowed product sales, market sources said.

June throughput to edge up

ChemChina's Changyi Petrochemical is likely to resume operations in June after maintenance, which is likely to boost the overall run rates slightly, JLC said.

Moreover, local government also encourages refining operations in an effort to boost economic activity and ensure that the country posts a positive GDP growth in the second quarter, refining sources said.

In the first week of June, the weekly run rates at the surveyed 40 independent refineries were at around 64.6% as of June 8, about 1.4 percentage points higher from the week earlier, according to the information provider.

As throughput hit four-month high and feedstock imports dropped to 34-month low, feedstock inventory at Shandong ports eased 5% as of May 26 to 7.37 million mt from 7.76 million mt as of April 28, JLC's data showed. The level in April was the highest since August 2021.

Shandong-based independent refiners received 12% more of feedstock in May at 7.54 million mt, compared with April 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 throughputs up 6.2%

Integrated refining complexes, on the other hand, also raised throughputs slightly over the month.

The combined crude throughput of Zhejiang Petroleum & Chemical and Hengli Petrochemical (Dalian) Refinery rose 6.2% from April to 864,200 b/d in May, according to JLC.

But the runs are unlikely to jump further as the two complexes have been suffering from petrochemical products losses, which were even worse than oil products, according to market sources.

Hengli has planned to shut some petrochemical units for maintenance in July accordingly, according to market sources.

ZPC has been maintaining relatively stable run rates at three out of its four 200,000 b/d crude distillation units.

Crude feedstock of Shandong independent refineries ('000 mt)

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

Top imported crudes cracked by Shandong independent refineries ('000 mt)

Source: JLC