May crude throughput to fall from two-year low on weak demand, maintenance

China’s crude throughput is set to fall further in May, extending the downtrend seen in April when it fell to the lowest in two years, as prolonged pandemic-related movement restrictions prompt state refiners to slash output further, data from S&P Global Commodity Insights showed May 27.

Asia’s biggest oil consumer is witnessing overall subdued crude runs as output cuts and scheduled maintenance works at state refiners, which account for majority of China’s refining capacity, have overshadowed the revival in run rates at independent refiners.

The country’s crude throughput slumped to 12.66 million b/d in April, according to NBS data, the lowest since touching 11.81 million b/d in March 2020 following lockdowns due to the initial COVID-19 wave.

In May, utilization rates at China’s four state-owned refiners fell from a two-year low to 73.4%, the lowest since 70.4% in March 2020, according to S&P Global data.

“Unless the government widens oil products exports access or relax COVID-19 movement controls, it is difficult for the state-run firms to lift throughputs economically,” a Beijing-based analyst said.

S&P Global data covered 48 state-owned refineries in May, compared with 46 in April, including 26 Sinopec refineries, 20 PetroChina refineries, CNOOC’s Huizhou Petrochemical and Sinochem’s Quanzhou Petrochemical refinery.

These refineries will process a combined 7.6 million b/d of feedstock in May, against a combined capacity of 10.3 million b/d.

Most of the state-run refineries across the country have been maintaining low runs or have cut further due to high products inventory, especially gasoline, except few refineries like PetroChina’s Sichuan Petrochemical.

The Sichuan plant lifted its utilization rate to 86% from 82% in April as the province is one of the few less risky regions in China for infections that encourage traveling while economic activities are as usual.
PetroChina falls to 19-month low

PetroChina’s run rate in May fell to a 19-month low of 71.3% from 74% in April due to scheduled maintenance in addition to little demand. The previous low was 71.6% in October 2020.

“There is no sign showing the demand for oil products has been improving, although the lockdowns in Jilin province have eased,” said a PetroChina refinery source in northeast China.
Of the 20 PetroChina refineries, 11 cut rates by one to 52 percentage points, with about 11 million mt/year of primary capacity in maintenance.
Liaohe Petrochemical led the reduction in May by slashing throughput by 64% to 130,000 mt as it has been shut since May 10 for maintenance.

Dalian Wepec’s utilization also dropped 11 percentage points to 69% as it has also shut two secondary units for maintenance since an explosion in mid-April.

Sinopec runs at 26-month low

Sinopec cut its run rates further by about two percentage points from April to 73.7% — a 26-month low, although its Tahe Petrochemical, Yangtze Petrochemical and Hainan Petrochemical refineries gradually restarted from scheduled maintenance.

Its flagship 27 million mt/year Zhenhai Petrochemical had to trim its utilization rate by 15 percentage points to 76% to offset high inventory pressure of oil products, a company source said.

The 14 million mt/year Shanghai Petrochemical shut its 8 million mt/year crude distillation unit and gasoil hydrotreater for maintenance, leading its run rate in May fall to 65% from 98% in April.

The 21 million mt/year Jinling Petrochemical’s run rate also lost about 10 percentage points from April, with a gasoil hydrotreater under maintenance.

The other two state refiners — CNOOC and Sinochem — cut their May throughput by about two to four percentage points, respectively.
Independent refiners’ recovery

Utilization rates at Shandong independent refineries, however, rose to 56% in May from 53.5% in April as their refining margins recover with cheap crude feedstocks, according to local information provider JLC.

Run rate at the 20 million mt/year Hengli Petrochemical (Dalian) picked up to around 85% in May from 70% in April, but that in the 40 million mt/year Zhejiang Petroleum & Chemical fell slightly to 79% from 80% last month.

“The margins for petrochemical products remain negative, while sales of oil products are also slow despite refining margin improvement,” said a company source with ZPC, adding that new oil products export quotas are needed to offset inventory pressure and cover losses from petrochemicals products.

In addition, the Shenghong Petrochemical has started to feed crudes into its 16 million mt/year CDU in early-May, but commercial startup is likely in August or September.

State-owned refineries maintenance schedule

* Sinopec’s Tahe Petrochemical restarted its 5 million mt/year refinery from May 7, following a 45-day maintenance that started March 16

* Sinopec’s Shanghai Petrochemical shut a 8 million mt/year CDU as well as a few secondary units for maintenance in mid-May to mid-June.

* Sinopec’s 9.5 million mt/year refinery Hainan Petrochemical has restarted from overall turnover since May 24, about two weeks behind the original schedule of May 11

* PetroChina’s Dalian Wepec shut some secondary units for maintenance since May 25, including a residue desulfurization unit for about two months

* Sinopec’s 14.5 million mt/year refinery Yangtze Petrochemical to restart May 29 from a scheduled maintenance since March 15

* PetroChina’s 5 million mt/year Liaohe Petrochemical shut for maintenance May 10-July

* PetroChina’s 6 million mt/year Karamay Petrochemical to shut for maintenance May 20-July 5

* PetroChina’s 3.7 million mt/year Qingyang Petrochemical to shut for maintenance June 10-Aug. 5

* PetroChina’s 2.5 million mt/year Yumen Petrochemical to shut for maintenance July 1-Aug. 16

* PetroChina’s 5 million mt/year Hohhot Petrochemical to shut for maintenance July 15-Sept. 15
Source: Platts