Singapore — China's Shandong independent refiners raised their operating rates to around 66.8% in September from 59% in August, according to a monthly report from local information provider JLC.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The higher run rates can be attributed to more refineries restarting after maintenance and higher refining margins.
The refining margin for cracking imported Oman crude increased by around Yuan 213 ($31)/mt to around Yuan 446/mt theoretically, on higher oil product prices, according to JLC.
In September, a combined capacity with around 21.5 million mt/year across seven independent refineries restarted, offsetting the 2.2 million mt/year capacity shut by Haike Petrochemical in mid-September.
This compared with an offline capacity of around 18.7 million mt/year in August.
In October, four refineries with a total capacity of 13.3 million mt/year plan to shut for maintenance.
JLC's survey covered 43 independent refineries that account for about 58% of the country's total independent refining capacity. JLC is a Beijing-based information provider, formerly known as JYD.
RECORD FEEDSTOCK CONSUMPTION
Feedstock consumption at the 43 refineries hit a record high of 8.99 million mt in September, surpassing the last record of 8.93 million mt in December. It was also up 11.7% from August.
Except for 0.5 mt of fuel oil cracked last month, the feedstock was crude oil, with 85% of it imported.
The consumption of domestic offshore crudes increased 77.3% on the month to around 1.25 million mt in September, a 9-month high.
Consumption of Merey crude was low last month at around 510,000 mt. Total consumption of the grade over January-September also dropped 18.1% on year, following a fall in supply from Venezuela.
Among all the imported crudes consumed by quota holders, ESPO remained the highest at around 1.39 million mt, though down 5.6% on month. Lula came in second at 990,000 mt, down 11.2% on month.
Consumption of Kissanje and Saturno crudes from Angola increased 11.1% and 15.4%, respectively, from August.
HIGH OIL PRODUCTS OUTPUT
Following higher run rates, output of oil products increased 7.1% on the month to around 6.08 million mt in September, a 4-month high.
Stocks also rose 12.7% on the month to around 824,000 mt, mainly due to low sales of gasoline.
Gasoline stocks jumped 34.6% on the month, while gasoil inventory dropped by a marginal 0.24%.
Demand for gasoline falls in autumn when car air conditioners are used less, JLC said.
Gasoil demand from construction projects rose sharply, adding to the bullish seasonal demand from the fishing and agricultural sectors.
Independent refineries produced more gasoil in September, leading the output ratio of gasoil versus gasoline to hit a 13-month high of 1.65:1.
This is much higher than the average ratio of 1.2:1 for state-owned refiners Sinopec and PetroChina.
The price of gasoil rose by around 8% on the month in Shandong market, reflecting strong demand.
--Edited by E Shailaja Nair, firstname.lastname@example.org