China's Shandong independent refiners lift run rates to 73.5% in April

Singapore — Average run rates at independent refineries in China's eastern Shandong province have rebounded further to 73.5% in April from 55.1% in March, with refineries boosting throughput due to higher margins, according to S&P Global Platts calculations based on raw data from Beijing-based information provider JLC.

It was the second, consecutive, month-on-month rise from a four-year low of around 44% in February, only slightly lower than last November's record high of 73.9%.

The higher run rates were mostly attributed to healthy domestic refining margins as feedstock costs plummeted in line with international crude prices, while domestic oil product prices have remained unchanged for months.

The refining margins for cracking a basket of imported crudes grew Yuan 300 ($43) from March to Yuan 683/mt, theoretically, according to JLC calculations. JLC was formerly known as JYD.

"Real refining margins vary greatly from refinery to refinery and can hit Yuan 1,000/mt, but definitely all refineries wish to boost run rates," an analyst with JLC said.

Looking ahead to May, with domestic demand continuing to recover and refining margins remaining healthy, it is likely run rates will remain above 70%.

JLC's survey covered 45 independent refineries, with a total capacity of 172.1 million mt a year (3.5 million b/d), which account for 50%-60% of China's total independent capacity.

Gasoil demand stokes higher runs

Gasoil demand continued to be the driving force behind independent refineries boosting crude throughput.

With demand from the mining industry, infrastructure projects and logistics rebounding, gasoil continued to sell well in April.

By contrast, gasoline demand was little changed as people were still cautious about long-distance driving, even during the five-day long Labor Day holiday in early May.

Gasoil output increased to a record high of around 5.09 million mt in April, 2.8% higher than the last record high of 4.95 million mt in December 2019.

Stocks of gasoil and gasoline fell 1.8% and 8.7%, respectively.

Feedstock consumption

Total feedstock consumption at the 45 refineries surveyed grew 29.1% on the month to 10.4 million mt (2.54 million b/d) in April.

It was the second-highest on record, with the record high of 10.5 million mt hit in November 2019.

Higher consumption has led to strong demand for imported crude, with 8.95 million mt discharged at ports for the refineries, up 11.2% from March.

As a result, port stocks have come to around 4.8 million mt from a 12-month high of 5.25 million mt in March.

The ports are: Qingdao, Dongjiakou, Longkou, Laizhou, Rizhao, Dongying and Yantai in Shandong province.