China’s oil refinery throughput in November fell versus the previous month as independent refiners cut run rates amid weak margins and crude oil imports slowed.
Total refinery throughput in the world’s second-largest oil consumer was 59.53 million metric tonnes, data from the National Bureau of Statistics (NBS) showed on Friday (Dec 15).
That was equivalent to 14.48 million barrels per day (bpd), a slowdown on October’s 15.05 million bpd and the lowest daily level since the January-February period, during which run rates averaged 14.36 million bpd.
Run rates were, however, 0.2 per cent higher than last November, when widespread pandemic restrictions battered China’s economy and pushed down demand for transport fuels.
China’s November crude imports data showed the first year-on-year decline in cargoes since April, with imports falling back to 10.33 million bpd – the lowest level since July.
Independent ‘teapot’ refiners in Shandong continue to see margin pressure in light of increasing competition for crude from their mainstay suppliers, Russia and Venezuela.
Despite steep declines in prices for international benchmarks Brent and West Texas Intermediate since mid-October, independent refiners were also limited by tight crude import quotas, though they were granted an additional three million tonnes in fuel oil import quotas at the end of the month.
Independent refiners sometimes substitute crude for fuel oil to produce diesel and petrol when quotas are tight.
Customs data showed November imports of refined fuel reached 4.16 million tonnes, up one-third from a year earlier, with the year-to-date volume soaring 87 per cent to 43.23 million tonnes.
Crude distillation unit utilisation rates at Shandong refiners have been depressed at between 55 and 57 per cent since late October, according to data cited by commodities consultancy Vortexa.
Beyond the independent refining hub of Shandong, poor macroeconomic indicators pointed to weakness in wider national fuel demand.
China’s manufacturing PMI shrank for the second consecutive month in November, reflecting sagging confidence in Beijing’s stimulus measures, while ratings agency Moody’s later put a downgrade warning on China’s credit rating due to an ongoing property crunch.
The NBS data also showed that domestic crude oil production in November was 17.20 million metric tonnes, or 4.19 million bpd, representing the highest level since June and an increase on 16.78 million tonnes in November 2022.
Natural gas production was up 5.3 per cent from a year earlier at 19.9 billion cubic metres (bcm), the highest level since March this year.
Source: Reuters