SINGAPORE: China’s refinery output fell 3.7% in June from a year earlier, official data showed on Monday, down for a third month amid planned maintenance, while lower processing margins and lacklustre fuel demand pushed independent plants to cut output.
Refiners processed 58.32 million metric tons of crude oil in June, data from the National Bureau of Statistics (NBS) showed, equivalent to 14.19 million barrels per day (bpd), for the year’s lowest levels so far.
Output for the first six months was 360.09 million tons, or 14.44 million bpd, down 0.4% from the corresponding period last year, the data showed, for the first decline in year-to-date volumes since the end of 2022, according to Reuters’ records.
The subdued production reflects the broadly sluggish economic recovery and refiners’ narrowing processing profits, analysts and traders have said.
While a few state-run refiners have resumed operations after planned overhauls, operational levels at smaller independent processors in the eastern refining hub of Shandong province dipped further in late June to 50.92% of their capacity, according to estimates by Chinese consultancy Oilchem.
That is the lowest since at least the start of 2023 and down from 61.08% a year earlier, Oilchem data showed.
“Smaller plants are really struggling with very weak margins, as demand, especially diesel, is falling behind expectations,” said a Shandong-based crude oil trading manager with an independent refiner.
China June crude oil imports fall 11% on year, H1 imports down 2.3%
During January and May, Chinese gasoline demand dropped nearly 2% on the year, with diesel down 14%, according to commodities consultancy Sublime China Information.
China’s economy grew much slower than expected in the second quarter, as a protracted property downturn and job insecurity squeezed domestic demand. Both industrial output and retail sales slowed in June.
NBS data also showed China’s crude oil production in June rose 2.4% from a year earlier to 17.95 million tons, or about 4.37 million bpd.
That is the highest daily volume since June 2015, Reuters’ records showed, an illustration of national oil companies’ efforts to ramp up domestic production from offshore fields and deeper onshore reservoirs to boost supply security.
Year-to-date crude oil output expanded 1.9% on the year to 107.05 million tons, or 4.29 million bpd. Natural gas production jumped 9.6% last month from a year earlier to 20.2 billion cubic metres (bcm), and first-half output this year rose 6% to 123.6 bcm.
Comments
Comments are closed for this article.