Sinopec lifts Mar throughput by 473,000 b/d on month to store cheap crudes

China's Sinopec has gradually lifted its throughput by more than 2 million mt, or 473,000 b/d, in March from February to lower crude inventory and make more space to store cheap crudes while China's product demand recovers, company sources said this week.

S&P Global Platts preliminary survey of eight Sinopec refineries showed that six along the coast increased their crude runs between 12,000 b/d and 43,000 b/d in March from February.

These eight refineries were the Sinopec Guangzhou, Anqing, Dongxing, Shanghai, Qilu, Luoyang, Wuhan, and Hainan.

"We have to raise crude throughput this month in a bid to lower our crude inventory," a southern China-based Sinopec refiner said.

The recent crude price plunge to below $40/b levels attracted Sinopec's buying interest, but high crude inventory has prevented it from buying more low-priced cargoes, the source said.

There was uncertainty about China's crude tank availability as the country does not publish inventory data, but relative stable crude oil imports in January-February and a significant reduction in throughput last month suggested high crude inventory levels in China.

Satellite data from Ursa, which can observe changes in surface-based storage facilities, showed that China's crude stocks stood at 702.27 million barrels at the end of February, rising 23.91 million barrels from the end of January, and 693,203 barrels higher than the level at the end of February 2019.

Meanwhile, recovering demand along the developed coastal regions of China encouraged refineries to lift throughput.

Sinopec's 320,000 b/d Shanghai Petrochemical has lifted its throughput by 18.8% to 267,000 b/d this week from the originally planned 225,000 b/d for March as demand recovers, a company source said.

He said oil product demand in the developed Shanghai and Zhejiang province has recovered to 60%-70% of the normal level from only 20% in early February as economic activities gradually resume from the coronavirus outbreak.

In February, the world's biggest refiner by capacity, Sinopec, slashed its run rate by 25 percentage points to a record low of 64% amid the COVID-19 outbreak from 89% in January, Platts reported earlier.

LAND-LOCKED REFINERS KEEP RUNS

However, not all Sinopec refineries boosted their crude runs.

In the land-locked regions, especially those neighboring worst-affected Hubei province, product demand recovery is slower than those along the coast as tight transportation controls remain, Sinopec's refiners said.

The 170,000 b/d Sinopec-SK Wuhan in the capital city of Hubei province plans to process 95,000 b/d in March, slightly lower than 101,000 b/d in February, the Platts survey showed.

Sinopec Luoyang Petrochemical in central China's Henan province neighboring Hubei, kept its utilization at 70% in March, almost flat from February, amid high product inventory.

Jet fuel sales was the worst among all oil products, Sinopec's refiners said, and added that they were continuing to cut jet fuel output by shutting jet fuel production units and blending the fuel to produce gasoil.

For gasoline and gasoil, Sinopec has suspended outsourcing from independent refineries in a bid to accelerate consumption of its own oil products, according to sources with knowledge about the matter.

The move will help Sinopec to increase oil product sales by 1.1 million mt from its own refineries, the refiners said.