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China's refinery throughput hits a 16-month low as quota and power crunch bites

China's refinery throughput hits a 16-month low as quota and power crunch bites

  • Summary of the following items
  • Sept is 13.64 million bpd, -2.6% on the previous year.
  • Jan-Sept throughput +6.2% on yr
  • Jan-Sept crude production +2.5% yr/y; gas +10.4% yer/year; Jan - Sep gas production (+10.8% Yr-Yer; January-September crude output +3.5%

China's daily crude oil processing rate fell again in September, to its lowest level since May 2020, as feedstock shortages and environmental inspections crippled operations at refineries and a power shortage slowed refined oil demand from downstream users.

According to National Bureau of Statistics (NBS) data on Monday, throughput last month decreased 2.6% from a year earlier to 56.07 million tonnes, or about 13.64 million barrels per day (bpd).

September throughput was also lower than 13,74 million bpd in August, which was a 15-month low.

In the first nine months of the year, 526.87 million tonnes or 14.09 million bpd was produced, up 6.2% on the previous year.

China has been hit by its worst power crunch in years, with at least 17 cities across the country requesting industrial plants to reduce production in order to lower power demand, which reduces transportation fuels demand.

Meanwhile, independent refiners are facing tightening crude oil import restrictions, and China's environmental ministry has since late August carried out a new round of inspections in five provinces, including Shandong, China' l refining hub.

According to Longzhong consultancy, the average operating rate at Chinese state-backed oil refineries in September was 76.76%, down 1.05% from a month earlier, while the rate among independent refinery in Shandong was 67.11%.

"We expect average utilisation rates at independent refineries to decline in October, as some refinery feedstock shortages are causing disruptions while the environmental regulations and power shortage also halt operations," Longzhong analysts wrote in a note.

China has announced a new batch of crude oil import quotas of 14.89 million tonnes, bringing the total allowances for 2021 down 4% from 2020, its first reduction since 2015, as the country worked to curb inefficient fuel processing.

China is also contemplating the inclusion of more cities in its 2021 winter air pollution campaign, which typically requires heavy industry to reduce production in order to clear smog-laden skies. read more

China's crude oil production in September was 16.61 million tonnes, or about 4.04 million bpd, which is 3.2% higher than the year-earlier level, according to data on Monday.

In the first nine months of the year, output increased by 2.5% to 149.84 million tonnes, or 4.01 million bpd.

Natural gas production last month increased 7.1% on the previous year to 15.7 billion cubic meters (bcm), while January to September production increased 10.4% to 1521.8 b cm.

(1 tonne = 7.3 barrels for crude conversion)

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