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China refinery throughput hits 16-month low as quota, power crunch bites

China refinery throughput hits 16-month low as quota, power crunch bites

FILE PHOTO: A crude oil terminal under construction is pictured off Ningbo Zhoushan port in Zhejiang province, China January 6, 2018. REUTERS/Stringer

BEIJING/SINGAPORE : China daily crude oil processing rate fell again in September, to the lowest since May 2020, as feedstock shortage and environmental inspection crippled operations at refineries and a power crunch dampened refined oil demand from downstream users.

Throughput last month fell 2.6per cent from a year earlier to 56.07 million tonnes, or about 13.64 million barrels per day (bpd), National Bureau of Statistics (NBS) data showed on Monday.

September throughput was also lower than 13.74 million bpd in August, which was a 15-month low.

Throughput in the first nine months of the year was 526.87 million tonnes, or 14.09 million bpd, up 6.2per cent on year, the data showed.

(GRAPHIC: China's refinery output declining since June as plants face tightening quotas - https://fingfx.thomsonreuters.com/gfx/ce/gdvzywmzgpw/Chinaper cent20crudeper cent20throughputper cent20throughper cent20Septper cent202021.jpg)

China has been suffering from its worst power crunch in years, with at least 17 regions across the country asking industrial plants to reduce production in order to lower power load, which cuts into demand for transportation fuels.

Meanwhile, independent refiners have faced tightening import quotas for crude oil, and the country's environmental ministry has since late August carried out a fresh round of inspections in five provinces, including China's oil refining hub of Shandong.

The average operational rate at Chinese state-backed oil refineries was at 76.76per cent in September, down 1.05per cent from a month ago, while the rate among independent refineries in Shandong was at 67.11per cent, data compiled by Longzhong consultancy showed.

"We expect average utilisation rates at independent refineries to dip in October, as some plants are facing feedstock shortages while the environmental rules and power crunch also curb operations," analysts from Longzhong said in a note.

Reuters reported on Friday that China issued a new batch of crude oil import quotas of 14.89 million tonnes, bringing the total allowances for 2021 down 4per cent from 2020 in its first reduction since 2015, as government worked to curb inefficient fuel processing.

China is also planning to include more cities in its 2021 winter air pollution campaign, which typically requires heavy industry to curtail production in order to clear smog-laden skies.

Data on Monday also showed that China's crude oil output in September was at 16.61 million tonnes, or about 4.04 million bpd, 3.2per cent higher than the year-earlier level.

Output over the first nine months this year gained 2.5per cent to 149.84 million tonnes, or 4.01 million bpd.

Natural gas output last month rose 7.1per cent on the year to 15.7 billion cubic metres (bcm), while January to September production gained 10.4per cent to 151.8 bcm.

(1 tonne = 7.3 barrels for crude conversion)

(Reporting by Muyu Xu in Beijing and Chen Aizhu in Singapore; Editing by Kim Coghill and Christopher Cushing)

Source: Reuters

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