CHINA DATA: Throughput to ease from 7-month highs as refineries set to go offline

Singapore — China's crude throughput in March is expected to ease from seven-month highs seen in February, as refiners embark on a much delayed maintenance spree after postponing them last year in the wake of COVID-19, a move that could put downward pressure on oil products availability.

About 50 million mt/year of refining capacity at six state-owned refineries -- five from Sinopec and one from CNOOC -- is expected to be shut over the March-April period, while May could also witness some maintenance, albeit at a relatively lower capacity level, latest industry data and information collected by S&P Global Platts showed.

As the heavy maintenance season kicks in, the March run rate is expected to ease from a seven-month high of 82.8% in February.

This could help ease the pressure on product export for some of Sinopec's refineries from April onward, as planned exports for March are still high amid improving crack in the region.

Sinopec's Changling Petrochemical and Jinan Petrochemical was shut end-February for maintenance, with CNOOC's Huizhou refinery expected to join from March 4. This new round of maintenance will be carried over into May, when two refiners of PetroChina, as well as Sinopec's Cangzhou Petrochemical will also join the bandwagon, taking another 18.5 million mt/year capacity offline.

"Many refineries postponed the maintenance plan in 2020 due to the COVID-19," said an analyst.

In February, the average run rate at the four state-owned oil majors -- Sinopec, PetroChina, CNOOC and Sinochem -- recovered to around 82.8%, from 80.3% a month earlier, according to Platts data.

The February run rate was 17 percentage points higher from 66.4% seen in February 2020, when most refineries cut crude throughput as the initial spread of COVID-19 started to take a toll on oil products demand.

PetroChina run rates in February

Average run rates at PetroChina has increased by about five percentage points on the month to 75% in February. This was mainly driven by the restart of PetroChina's Yunnan Petrochemical, which lifted throughput to 770,000 mt in February, up 18% from January levels.

In addition, PetroChina's Sichuan Petrochemical also raised run rates by about five percentage points on the month to 85% in February. Six other refineries, mostly in North China, also lifted run rates marginally -- by about one to three percentage points from previous month.

The four state-run oil majors planned to process a combined 7.39 million b/d of crude oil in February, accounting for 82.8% of their nameplate capacity of 8.86 million b/d. In comparison, the four oil majors had processed 7.11 million b/d of crude in January, or 80.3% of their combined nameplate capacity.

CNOOC has started to cut crude throughput at its 10 million mt/year Phase 2 project from the last week of February, to prepare for the overall shutdown, according to a company source. This has led to a drop of one percentage point in run rate from January levels.

Data from 39 refineries were collected in February, same as January. These include 20 Sinopec refineries, 17 PetroChina refineries, CNOOC's Huizhou Petrochemical and Sinochem's Quanzhou Petrochemical refinery.

Independents keep run rates steady

In contrast to state-owned oil majors, run rates at China's independent refineries are more or less stable. Run rates at China's two new greenfield refineries -- Hengli Petrochemical (Dalian) Refinery and Zhejiang Petroleum & Chemical -- have been broadly steady from January levels.

The 20 million mt/year Hengli refinery in Northeastern China has been operating at around 107%-108% capacity, with the ethylene unit running at around 110% capacity, according to a company source. ZPC's average utilization rate currently is around 70% at three of its CDUs.

Meanwhile, run rates at 45 small-sized private sector refineries in Shandong province have been more or less stable at around 73.8% in February, compared with 74.3% in January, according to local information provider JLC.

"Refining margins have improved a little bit compared with January, although production costs have increase due to higher crude prices," said a refinery source.

But run rates are likely to drop slightly from March, as ChemChina's Zhenghe Petrochemical has planned to shut for maintenance from March, while April would witness four more shutdowns, while May would witness one shutdown.

State-owned refiners' scheduled maintenance starts in 2021

**PetroChina's 13 million mt/year Yunnan Petrochemical refinery restarted Jan. 25 following a near 50-day maintenance that began Dec. 5.

**Sinopec's Changling Petrochemical will be shut for a 55-day maintenance that began around Feb. 19.

**Sinopec's Jinan Petrochemical will shut the entire refinery for maintenance over late February-early April.

**Sinopec's Jiujiang Petrochemical will be shut for maintenance over March-April.

**CNOOC's Huizhou Petrochemical will shut the Phase 2 refinery of 10 million mt/year capacity for maintenance over March 4-April 22.

**Sinopec's Shanghai Petrochemical will shut a 6 million mt/year CDU and secondary units for maintenance over April-June, with a few secondary units starting in March.

**Sinopec's Cangzhou Petrochemical will shut the entire refinery for maintenance over May 10-June 30.

**Sinopec's Yanshan Petrochemical will be shut for maintenance over May-June.

**Sinopec's Yangtze Petrochemical will shut some secondary units for maintenance over March-April.

**PetroChina's Jilin Petrochemical will shut for maintenance over May-June.

**PetroChina's Fushun Petrochemical will be shut for an overall maintenance over June-July.

**Sinopec's Maoming Petrochemical will shut a 10 million mt/year CDU for maintenance over early-June till mid-July.

**Sinopec's Shijiazhuang Petrochemical will be shut for an overall maintenance over end-August till end-October.

**Sinopec's Guangzhou Petrochemical will shut a 8 million mt/year CDU for maintenance over mid-October-end November.

Average run rates at China's top refiners in Feb 2021: