China’s four oil giants lifted their average utilization rate to a 19-month high of 84% in August as plants returned from maintenance, in line with the expectation that the state-run refineries would compensate for the throughput cut by their independent peers.
While independent refineries were expected to cut utilization rate in the second half of 2021 due to tightened access to feedstocks, state-run refineries would raise throughput in order to compensate for the reduction, S&P Global Platts reported earlier.
In August, 41 refineries under Sinopec, PetroChina, CNOOC and Sinochem planned to process 32.79 million mt, or 7.76 million b/d, of crude, against their nameplate capacity of 9.24 million b/d, Platts data showed on Aug. 25.
Their utilization rate rose from 82% in July when they planned to process 7.58 million b/d of crude, thanks to two refineries resuming production in August. Average utilization rate of these four giants was last high at 85% in January 2020, Platts data showed.
Sinopec’s 360,000 b/d Maoming Petrochemical ran at about 110% of its nameplate capacity in August, after restarting its 200,000 b/d CDU from maintenance on July 19.
It boosted Sinopec’s average utilization rate to around 88% from 86% in July, despite its peer — the 280,000 b/d Qilu Petrochemical — shutting the 80,000 b/d crude distillation unit, or CDU, for maintenance over Aug. 2–Sept. 21.
Meanwhile, PetroChina’s 200,000 b/d Jilin Petrochemical also restarted from turnaround on July 19, raising the oil giant’s average runs from 73% in July to around 76% this month.
Pressure from product exports
Moreover, the 7.5 million mt oil products export quota allocation in early August helped ease stock pressure in the domestic market, temporarily allowing the state-backed refiners to buoy their crude runs.
“But crude throughputs could dip in September amid weakening domestic demand,” said a source with Sinopec’s refinery in east China.
Even with the new allocation, oil companies held only 7.54 million mt of quota available for exports from August onward, indicating that they may have to slash their monthly outflows by about two-thirds in August-December compared with the volume in the first seven months of 2021, unless there is another round of allocation.
“A slump in oil product exports will cap state-run refineries’ throughput despite the reduction in the private sector, especially when domestic demand is not good,” a Singapore-based analyst said.
S&P Global Platts Analytics recently expected China’s throughput to retreat to about 14.4 million b/d in the third quarter from about 14.7 million b/d in Q2.
Similar to July, Platts data covered 41 stated-owned refineries — 22 Sinopec refineries, 17 PetroChina refineries, CNOOC’s Huizhou Petrochemical and Sinochem’s Quanzhou Petrochemical. The 22 Sinopec refineries covered by Platts have a combined capacity of 5 million b/d, accounting for 83.6% of the refining giant’s total capacity. Platts covered 3.49 million b/d of capacity under PetroChina, accounting for 85.3% of the company’s total capacity.
Sinochem and CNOOC kept their run rates stable on the month in August.
Private refineries’ run in downtrend
In the private refining sector, over five percentage point cut in utilization rate was widely seen in August due to crude import quota shortage.
Independent refineries’ crude import quota availability fell to around 40 million mt from August onward, compared with about 95.72 million mt of crude import in the first seven months, Platts data on 36 key independent refineries showed.
The 400,000 b/d Hengli Petrochemical (Dalian) lowered its run rates to around 100% in August from 105% last month, which is the lowest level since May 2020. The refinery’s average utilization rate were at around 106% over the past 12 months.
Meanwhile, Zhejiang Petroleum & Chemical, or ZPC, kept its 200,000 b/d CDU in phase 2 project shut since late-July despite it obtaining 3 million mt of crude import quota recently. Currently, ZPC is running its 400,000 b/d phase 1 project at 100% of capacity. Therefore, its monthly throughput is about 1.7 million mt, falling from about 2 million mt/month when it ran three CDUs at 80% over January-July.
In addition, the weekly run rate at the 43 Shandong-based independent refineries was at 62.3% as of Aug. 18, down from 65.7% as of July 21, according to energy information provider JLC.
STATE-OWNED REFINERIES’ MAINTENANCE SCHEDULE
** PetroChina’s Jilin Petrochemical restarted around July 20 from a scheduled maintenance over June 1-July 19.
** Sinopec’s Maoming Petrochemical has restarted its 10 million mt/year CDU after maintenance over June 10-July 19.
** Sinopec’s Qilu Petrochemical has shut its 4 million mt/year CDU for maintenance from Aug. 2, which will last till Sept. 21.
** Sinopec’s Shijiazhuang Petrochemical will be shut for overall maintenance over end-August to end-October.
** Sinopec’s Guangzhou Petrochemical will shut its 8 million mt/year CDU for maintenance over mid-October to end-November.
** Sinopec’s Gaoqiao Petrochemical will shut the entire refinery for maintenance from Oct. 10 till early-December.
** Sinopec’s Fujian Refining & Petrochemical will shut its 4 million mt/year CDU for maintenance over mid-October to mid-November.
Average run rates at China’s top refiners:
Source: Platts