China's crude throughput to continue to fall in Dec on weak demand

China's crude throughput is set to continue the downtrend in December from the record high in September, due to weak domestic demand and a slump in oil product exports, information collected by S&P Global Commodity Insights showed on Nov. 29.

Both state-run and independent refineries have cut throughputs in November, from 15.12 million b/d in October and the historical high of 15.54 million b/d in September, S&P Global estimated based on the data from China's National Bureau of Statistics.

"Oil product stocks have been piling up as winter is a slow season for oil consumption, which will continue to weigh on the throughputs next month," said a Beijing-based analyst.

Meanwhile, China's total export quotas for clean oil products may fall to about 5.65 million mt (736,000 b/d) for November and December, about 20% below the average exports of 921,000 b/d over January-October, estimated by S&P Global based on China's customs data. This will likely cap the outflows for clean oil products in November-December, sources said.

In November, the average utilization rate of the 50 state-owned refining plants covered by S&P Global fell to a five-month low of 81.3%, as three of them were still under maintenance. These refineries targeted to process 8.67 million b/d of crude in the month, compared to their combined primary capacity of 10.66 million b/d.

S&P Global covered 26 Sinopec refineries, 22 owned by PetroChina, CNOOC's Huizhou Petrochemical and Sinochem's Quanzhou Petrochemical.

On a year-on-year basis, the run rate was also lower from 82.7% in November 2022, when pandemic-related restrictions started to loosen a bit in some regions and refinery runs edged up slightly.

Sinopec leads the cut

The run rates at Sinopec, Asia's biggest refiner, led the month-on-month throughput cut with its average utilization declining by three percentage points to 81.8% in November from 84.5% in October, according to S&P Global data.

Apart of from the ongoing maintenance at three of Sinopec refineries, 17 out of the rest 23 plants cut run rates by at least one percentage point during the month.

The scheduled maintenance throughout the month kept a combined 300,000 b/d of refining capacity offline. These include the 100,000 b/d Dongxing Petrochemical, the 100,000 b/d Qingdao Petrochemical, and the 264,000 b/d Guangzhou Petrochemical, which shut its 100,000 b/d crude distillation unit.

In addition, Sinochem's Quanzhou Chemical trimmed its run rates to around 99% in November, compared with 105% a month earlier.

CNOOC's 440,000 b/d Huizhou Petrochemical also cuts its run rates to 95% from 97% in October.

PetroChina's runs stable

PetroChina's utilization was largely stable month on month at 78.1% in November, despite its 200,000 b/d Sichuan Petrochemical restarting Nov. 10 from a maintenance after nearly two months.

More refineries under PetroChina, especially those in northeastern China, cut throughputs throughout the month due to high oil product inventory, offsetting the gain in Sichuan.

This included PetroChina's Dalian Petrochemical and Daqing Petrochemical & Refining, which cut their run rates from October by about eight and five percentage points, respectively.

"Gasoline stock is rising in local market as driving activities has slowed down in Northeast China amid freezing temperature, so [there is a] need to cut throughputs to cap stock level," said a refinery source with PetroChina.

PetroChina, the leading gasoline exporter in China, usually increases exports when the domestic market is in a surplus situation. But the limited quotas availability forces it to cut both outflows and throughput instead, refining sources said.

Private refiners cut utilizations

The new 320,000 b/d Shenghong Petrochemical cut its run rates to around 91% as of Nov. 26 due to an explosion at one of its boilers connecting to the CDU from around 100% earlier of the month. The utilization has been generally restored late in the week after the accident.

As a result, the refinery's monthly average utilization was at around 97% in November, up from 96% in October when the refinery was experiencing some outages.

The other two private refineries -- the 400,000 b/d Hengli Petrochemical (Dalian) refinery, and the 800,000 b/d Zhejiang Petroleum & Chemical -- also trimmed their respective run rates slightly over the month primarily due to weak margins, sources said.

The run rates at Hengli fell to around 101% in November from 105% a month earlier, while the utilization at ZPC also declined by one percentage point to around 102%.

The small-sized independent refineries in eastern Shandong province also reduced their average utilization to about 65.2% in November from 69.7% in October, data from local energy information provider JLC showed. These refineries have been grappling with weak refining margins and are short of crude import quotas, S&P Global previosly reported.

Unlike their state-run or private integrated peers, which largely rely on regular crude supply, the small independent refineries started making profit from processing sanctioned cheap feedstock in the second half of November, which would cushion the fall in utilization rates in December.

State-owned refineries maintenance schedule

• PetroChina's 200,000 b/d Sichuan Petrochemical plant restarted on Nov. 10 from an overall maintenance that started around Sept. 14.
• Sinopec's 100,000 b/d Dongxing Petrochemical plant shut for a two-month maintenance from Oct. 8 until Dec. 18.
• Sinopec's 100,000 b/d Qingdao Petrochemical plant shut for a two-month maintenance over Oct. 7- Dec. 5.
• Sinopec's 264,000 b/d Guangzhou Petrochemical plant shut its 100,000 b/d crude distillation unit for maintenance from Oct. 16 to mid-December.

AVERAGE UITLIZATIONS AT CHINA'S TOP REFINERIES

Source: S&P Global Commodity Insights