CHINA DATA: May crude throughput slumps 11% on year but recovers marginally from April

China's crude throughput slumped 10.9% on the year to 12.75 million b/d in May, but recovered 0.7% from a two-year low of 12.66 million b/d in April amid Beijing's effort to stimulate the sagging economy following pandemic-led movement curbs, the National Bureau of Statistics data showed June 15.

Analysts expect a further month-on-month growth in June on the back of a rebound in domestic demand and rise in oil product exports.

According to S&P Global Commodity Insights data, tank-topped oil product inventories led to a further throughput reduction in May at the state-owned refineries -- accounting for more than 65% of China's total refining capacity -- which had cut their average run rate to 73.4% from 76.4% in April.

Small-scale independents, which accounted for over 17% of China's capacity, lifted their throughput by 13.1% from April to a four-month high of 1.93 million b/d as six of the refineries resumed operations after maintenance, data from information provider JLC showed.

The combined crude throughput of Zhejiang Petroleum & Chemical and Hengli Petrochemical (Dalian) Refinery also rose 6.2% from April to 864,200 b/d in May, accounting for about 12% of the country's capacity.

The NBS releases data in metric tons, which S&P Global converts to barrels using a 7.33 conversion factor. In metric tons, throughput in May was at 53.92 million mt, up 4.1% from April.

In January-May, crude processed by the country fell 5.3% on the year to 13.45 million b/d, the NBS data showed.

China produced 4.15 million b/d of crude in May, up 3.6% on the year. Over January-May, volumes rose 4.1% on the year to 4.16 million b/d, as per NBS data.

The rising production, coupled with a four-month high crude imports in May, lifted China's crude inventory last month due to relatively weak crude throughput.

Crude oil imports in May stood at 10.84 million b/d, representing a robust year-on-year growth of 11.9% and a 3.1% increase from April levels, the customs data showed June 9.

According to Kpler shipping data, China's crude stocks were estimated at an 11-month high of 939.07 million barrels in May, accounting for 63% of the country's crude storage capacity that Kpler monitors.

June throughput to rise

A combination of high crude inventory, increasing domestic oil demand and product exports, coupled with the government's call to boost production will likely push up crude throughput in June, but the increase is likely to be limited, a Beijing-based analyst said.

Analysts expect China's oil demand in June to grow around 4% from a month ago after Shanghai eased pandemic-related restrictions following a two-month lockdown while Beijing late-May released a slew of measures to simulate the economy.

Moreover, the government issued 4.5 million mt of supplementary oil product export quotas on May 31, which allowed state-owned oil companies to raise gasoline, gasoil and jet fuel exports to over 3 million mt in June from the planned outflows of above 2 million mt initially.

"State-owned refineries will take the lead in June due to their cut in May and the gain in oil product exports," the analyst said.

However, analysts said the rise in throughput from June onwards is likely to be limited as the ongoing dynamic 'zero-COVID' control policy caps domestic demand growth, while the oil product exports are likely to see a year-on-year drop in 2022 despite the supplementary quota allocation.

Even with the new quotas, the total allocation for 2022 stands at 17.5 million mt as of June 15, still down 40.7% on the year, S&P Global data showed.

China's crude output, throughput (million mt)

Source: National Bureau of Statistics