Amid heavy planned seasonal maintenance, crude oil processing at China’s refineries dipped by 1.8% in May from a year earlier, to the lowest level in nine months.
Chinese refiners processed a total of about 13.92 million barrels per day (bpd) of crude oil last month, according to data from the National Bureau of Statistics cited by Reuters.
Throughput slumped to the lowest level since August last year as several major state-run and private refiners underwent scheduled maintenance ahead of the peak driving season.
The processing rates in May were also lower than the 14.12 million bpd of crude Chinese refiners processed in April.
China accelerated crude oil imports in March and April, but the increased purchases this spring weren’t necessarily a sign of recovering fuel demand in the world’s biggest crude importer. It’s more likely that Chinese refiners were aggressively stockpiling cheaper crude amid uncertainties about sanctioned barrels going forward.
The strong March and April crude imports signaled continued stockpiling at Chinese refineries and strategic storage, rather than an acceleration in demand.
Last month, 11 refineries in China were either fully offline or partially shut for scheduled maintenance works, per data from Chinese consultancy Sublime China Information cited by Reuters.
“Chinese oil majors also saw significant capacity offline in May, as the month marked a peak in scheduled maintenance,” Emma Li, senior market analyst at Vortexa, said last week.
However, the decline in refinery throughput could stop in June as several state-controlled refineries are expected to complete turnarounds in late May and early June, Li added.
Weaker demand from the independent refiners, the so-called teapots, reduced the buying of sanctioned barrels from Iran, Russia, and Venezuela in April and May, the analyst noted.
“Beyond the widespread maintenance activity expected to stretch into July, ample onshore inventories in Shandong allowed teapots to pull back on spot crude purchases, especially of Iranian barrels,” Vortexa’s Li said.
By Tsvetana Paraskova for Oilprice.com
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