China’s Crude Processing Dips To Lowest Since March 2020

Crude throughput at Chinese refineries slumped in July to the lowest level since the height of the pandemic in March 2020, amid unplanned facility outages and lower processing rates at independent refiners due to declining refining margins.

Chinese refiners processed 53.21 million tons of crude oil last month, equal to 12.53 million barrels per day (bpd), per Reuters calculations based on official data from China’s National Bureau of Statistics. The refinery throughput was down by 8.8 percent compared to July 2021 and down from the June 2022 processing rate of 13.37 million bpd.

In June, Chinese refiners’ processing rates were higher than in May, but some 10 percent lower than the all-time high reached last year in June, data showed last month. Chinese refineries’ throughput fell for the first time in more than a decade during the first half of the year, by 6 percent to 13.4 million bpd.

Now when July is included in the year-to-date refinery throughput, it turns out Chinese crude processing dropped by 6.3 percent to 13.09 million bpd compared to the period January-July 2021.

Crude processing was down in July due to unplanned shutdowns at refineries owned by state giants Sinopec and PetroChina, industry sources told Reuters.

Moreover, China’s independent refiners also cut production because refining margins are coming off recent highs. Subdued refining at the world’s top crude oil importer, China, could continue to weigh on oil prices along with renewed fears of economic slowdown, including lower economic growth in China than previously expected.

In addition, Chinese authorities plan to launch a new round of tax probes on private refiners, the so-called teapots, sources in the refining industry told Reuters last week, in what could slow down further the crude processing rates at the world’s top crude oil importer.

The independent refiners in China, mostly located in the eastern province of Shandong, account for around a fifth of all Chinese crude imports.  

Source: Oilprice.com