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Chinas top refiners to hike output 10% in April as domestic fuel demand rises

April 07/2020

MOSCOW (MRC) -- Chinas top fuel producers are set to raise April crude throughput by a combined 755,000 barrels per day (bpd), or 10% from March, as domestic fuel demand picks up after being hammered by the coronavirus outbreak, said Hydrocarbonprocessing.

The increase, calculated by Reuters based on interviews with six industry sources, shows China bucking the global trend of refiners deepening output cuts to cope with slumping demand amid nationwide lockdowns in the global pandemic.

Sinopec, Asias top refiner, is expected to raise throughput by at least one million tonnes in April from March, or 400,000 barrels per day (bpd), said three industry sources with knowledge of Sinopec operations. All of the sources interviewed for this story declined to be named as theyre not authorised to talk to media.

After the increases, Sinopec will be producing close to 4.5 million bpd, up from under 4 million bpd estimated for February when Sinopec made the deepest production cuts in decades to operate its refineries at two-thirds of capacity after the outbreak slashed fuel demand.

The April level, however, would still be about 480,000 bpd, or 10%, below the average processing rate last year at 4.98 million bpd.

Meanwhile No.2 state refiner PetroChina is expected to hike output by around 165,000 bpd to 2.92 million bpd, said two of the sources.

Chinese fuel demand is rebounding, but only at a modest pace, as resuming (domestic) economic activity was somewhat offset by a steep fall in exports, said Wang Zhao, analyst with commodities consultancy Sublime Information Co.

Among fuels, demand for diesel is recovering the fastest as China pumps up spending on infrastructure and as manufacturing recovers, but plunging export orders are capping growth.

Gasoline consumption is also recovering, with more cars on the roads as people avoid public transportation, albeit over shorter distances. Massive cancellations of international flights will keep aviation fuel in the doldrums. Smaller state-run refiner CNOOC will operate its 240,000 bpd Huizhou phase-1 plant at full rates in April, after ramping it up in March from a cut of 8% in February, said a source with direct knowledge of the plants operations.

The idea is to quickly draw down the higher-cost crude inventories to allow for processing cheaper purchases that are arriving, said the source. Still, these run rates are subject to changes as refiners are now adjusting production plans by the week, or even twice a week to quickly respond to unpredictable market changes, state oil executives said, rather than once a month.

Sinopec, PetroChina and CNOOC didnt respond to requests for comment. In the private sector, Hengli Petrochemical Co Ltd and Zhejiang Petrochemical Corp are both ramping up production this month to nearly 110% of their nameplate capacity at 400,000 bpd each, up from 100% in March, senior company officials told Reuters.

Sinopec Zhenhai Refining and Chemical, part of Sinopec Group, has planned to take its No. 3 Polypropylene (PP) unit off-stream in April 2020. The company is likely to start maintenance at the unit on April 9, 2020. The unit is expected to remain under maintenance for about one week. Located at Ningbo, China, the No. 3 PP unit has a production capacity of 350,000 mt/year.

As MRC reported earlier, Sinopec Corp is set to launch a new USD5.7 billion refining and petrochemical complex in the south of the country in second-quarter 2020 using crude oil from Kuwait as a key feedstock. The project being developed by Asias top refiner, a 200,000 barrels-per-day (bpd) plant in Zhanjiang, a coastal city in Guangdong province, will become the third greenfield refinery-petrochemical complex to be built in China within a space of two years.

According to MRC's ScanPlast report, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, Sinopec.
Category:General News
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