China Refinery Throughput Falls For Second Time This Year
China's refinery throughput fell 0.9% from a year earlier to 8.74 million barrels per day (bpd), the second decline this year, as planned and unexpected shutdowns cut into operations.
The National Bureau of Statistics said on Wednesday that China processed 37.11 million tons of crude oil in October. On a daily basis, it was 0.5% lower than the 8.78 million bpd recorded in September.
The low runs came as China cut retail prices for diesel and gasoline in early October, squeezing margins at state refineries and forcing many independent plants to cut or halt productions.
Tightening domestic supplies have led many independent service stations to suspend or ration sales, as dominant refiners such as China Petroleum and Chemical Corp (Sinopec) , facing thinning inventories, curb diesel sales.
Apart from planned maintenance such as the full shutdown of CNOOC Ltd's 240,000-bpd Huizhou refinery, a fire at Sinopec's Gaoqiao plant in east China also reduced production.
"Some refineries chose to undergo maintenance in the face of poor refining margins," said a Beijing-based analyst.
But throughput is expected to recover this month as refineries were asked to run at capacity to cover the fuel shortage that has spurred diesel imports by state oil companies.
"Crude runs are expected to rise for the rest of the year as refiners are under pressure to secure supply," said the analyst.
Top Asian refiner Sinopec has said it plans to process a record 18.3 million tons of crude in November, up from 18.05 million tons in October, after diesel stocks fell to less than 10 days' of sales.
Second-largest oil refiner PetroChina Co Ltd said in late October that all of its refineries had completed maintenance and were running at full rates.
A Reuters poll of a dozen refineries showed that refinery output could recover to the highest level in a year in November.
To ease the shortages, Sinopec and PetroChina have bought about 320,000 tons of diesel for November and December delivery, while CNOOC, the country's third-largest oil company, imported about 100,000 tons of diesel last month to replenish thinning inventories.
The supply squeeze in China is expected to ease this month or next as Sinopec and PetroChina bring on line new crude refining units and as plants return from maintenance.
China's crude oil production in October fell 6.2% on year to 16.67 million tons, or 3.93 million bpd, the statistics bureau said.
In September the government ordered a full shutdown of the country's largest offshore oil field, Penglai 19-3, after an oil spill.
China is expected to release preliminary oil trade data, including crude oil imports and net imports of refined fuel, on Thursday.
