China’s refinery output hits record as margins improve on new taxes

SINGAPORE: China’s refinery throughput rose 4.4% in May from the same month a year ago to a record high, as margins improved on the back of easing supplies of blending stocks after Beijing announced new taxes.

The country processed 60.50 million tonnes of crude oil last month, data from the National Bureau of Statistics (NBS) showed on Wednesday, equivalent to 14.25 million barrels per day (bpd).

That compares with 14.09 million bpd in April and a touch above a previous record at 14.2 million bpd last November. Throughput for the first five months was 292.74 million tonnes, up 12% from a year earlier.

New taxes on imports of light cycle oil and mixed aromatics are set to cut into supplies of diesel fuel and gasoline and ease supply overhangs, especially of diesel, lending support to refining margins.

According to estimates by Shandong-based consultancy JLC, “theoretical” refining margins at independent plants averaged at around 650 yuan ($101.78) a tonne at end-May, the highest so far this year. Crude throughput was also supported by a resumption of production at state-run refineries following regular overhauls.

The data also showed China’s crude oil output in May was 17.03 million tonnes, or 4.01 million bpd, up 3.5% from a year earlier. Output over January-May gained 2.2% to 82.65 million tonnes.

Natural gas output last month increased 5.8% from a year earlier to 16.9 billion cubic metres (bcm), the data showed, with total production in the first five months up 10.3% year-on-year at 87.2 bcm.