- Feb feedstock consumption falls to a 2-year low
- Product stocks increase in early March on hiking crude prices
- ZPC and Hengli raise throughputs by 2.5% on month
A recent news article published in the Platts states that Shandong independent refiners’ product output falls 17.3% on month in Feb.
Gasoline and gasoil output
The gasoline and gasoil output at China’s independent refineries fell by 17.3% on month in February, following a continuous drop in refinery throughputs, data from local energy information provider JLC showed on March 14.
Lower output offset China’s pressure to send out more barrels to overseas.
The output of gasoline has dropped by 20.2% to 1.89 million mt, while gasoil fell less by 15.7% on month to 3.64 million mt.
Due to lower feedstock throughputs
This was due mainly to the lower feedstock throughputs at independent refineries in February. Feedstock consumption at China’s Shandong independent refineries have fallen to a two-year low of 8.04 million mt in February, the lowest since February 2020, when the country was firstly hit by the coronavirus pandemic and refineries shut cautiously in overaction. The combined feedstock consumption was last low at 5.89 million mt in February 2020.
But at the same time, the inventory of gasoline has increased by 11.8% on month to 460,000 mt, while gasoil stocks fell by 13.9% on month to 800,000 mt, according to JLC data.
The increasing stocks of gasoline largely resulted from less driving demand after the Chinese New Year holiday. It coupled with the rocketing gasoline prices, which was driven by the escalating tensions between Russia and Ukraine, all in all hindering the retails of gasoline and leading to increasing stocks.
Gasoil demand has meanwhile slowly picked up after the holiday period when construction projects resumed operations, which has eased the stocks.
“But the hike in international crude prices have started to impact the demand of gasoline, and the stocks have started to increase in the past days,” said an analyst with JLC.
Stocks at several independent refineries have climbed to a relatively higher level, while others were still relatively low, the analyst added.
Feedstock consumption down to 23-month low
In February, around 2.1 million b/d of feedstocks — comprising of crudes, bitumen blend and fuel oil — were cracked, down by 5.3% from 2.2 million b/d in January, according to JLC data.
It was also a 23-month low, falling 20.7% year on year from 2.65 million b/d a year earlier.
While Shandong independent refineries processed less feedstock in February, the integrated refining complex has generally maintained high run rates throughout the month.
Details of refineries
Zhejiang Petroleum & Chemical and Hengli Petrochemical (Dalian) Refinery, has raised their daily throughputs by 2.5% from January, to process a combined 1.1 million b/d of crudes.
Turning into March, Shandong independent refineries have not lifted their run rates after the holiday and the Beijing Olympics, but trimmed their weekly run rates further, due mainly to worsening margins, according to JLC. The average run rates at 40 Shandong independent refineries, on the other hand, have continued to fall to around 57% as of March 9, from around 60% a week earlier, according to JLC. This compared with around 70% in the previous months.
“Those refining complex have still maintained higher profits than their peers in Shandong in early March,” said a Beijing-based analyst.
According to the analyst, those refining complexes mostly take crudes from the Middle East via long-term contract, which is priced in a near-term, while the crudes purchased by those independent refineries are normally priced two months later. This has largely hurt their refining margins, especially at this moment when the crude prices rocketing from $90/b in early February to $130/b in early March, he added.
JLC’s survey covers 40 independent refineries in Shandong, with a combined capacity of 159 million mt/year, accounting for about 17% of China’s total refining capacity.
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