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China state-owned refiners lift run rates to 80% in June from 76% in May

June 22/2020

MOSCOW (MRC) -- China's state-owned refineries Sinopec, PetroChina, CNOOC and Sinochem have ramped up crude throughput to average 80% of capacity in June from 76% in May as profit margins increased, a monthly survey by S&P Global Platts showed June 19, said S&P Global.

Their June runs are also higher than the 79% recorded in the survey a year earlier, the data showed. "We have lifted our crude runs as we finally start making money this month - when all the high-cost feedstock was finished and we started to crack the cheap crudes that we booked in March," an Anhui-based Sinopec refiner source said.

Moreover, "as crude prices moved to around $40/b, the Price Adjustment Risk Fund that state-owned refineries need to pay is less than before, when crude prices were far below USD40/b, so we can keep more profit," a Shandong-based Sinopec refiner source said.

Beijing collects a Price Adjustment Risk Fund contribution on gasoil and gasoline sales when a basket of crude oil prices falls below USD40/b. The payment changes in line with the price gap between USD40/b and the actual average price of the basket of crudes over 10 working days. Guidance retail prices for gasoline and gasoil are set at a level corresponding to a crude price of USD40/b.

In the state-owned sector, PetroChina led the recovery with a five percentage point increase in run rates from May, while Sinopec and CNOOC each raised rates by three percentage points.

The higher throughput comes despite two big refineries, PetroChina's 2.05 million mt/year Dalian Petrochemical and Sinopec's 13.8 million mt/year Tianjin Petrochemical, undergoing maintenance since May.

In total, 32 of the state-owned 38 refineries surveyed across the four companies have raised run rates in June. These refineries, with a combined capacity of 8.6 million b/d, plan to process 6.9 million b/d of crude in June. Platts' June survey canvassed 19 refineries under Sinopec, 17 under PetroChina, CNOOC's Huizhou refinery and Sinochem's Quanzhou refinery.

The survey included the 8.5 million mt/year Sinopec-SK Wuhan Petrochemical refinery in Hubei, the province most affected by the coronavirus pandemic, which plans to run at 105% of its capacity in June, up from 93% in May, 61% in April and a floor of 59% in March, the data showed.

Seven refineries with a combined capacity of 1.49 million b/d reported operating above 100% capacity in June, accounting for 17% of the surveyed capacity. This compares with three refineries last month.

We remind that, as MRC wrote before, Sinopec Qilu Petrochemical, a subsidiary of Sinopec Corporation, shut the cracker  unit in Tianjin in northeast China for scheduled repairs on 15 June, 2020. This cracking unit with a capacity of 900,000 tonnes of ethylene per year and 480,000 tonnes of propylene tons per year will be closed for scheduled repairs until 24 June, 2020.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.


mrcplast.com
Author:Anna Larionova
Tags:PP, PE, CNOOC, PetroChina, Sinochem, Sinopec.
Category:General News
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