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July throughput in China likely to hit record high as companies lift average runs to 84%

July 28/2020

MOSCOW (MRC) -- Crude throughput at China's domestic refineries is likely to hit another record high in July as the state-owned oil companies, which collectively account for 69% of the country's refining capacity, have boosted their average utilization rate to a six-month-high of 83.6% this month from 80% in June, data collected by S&P Global showed July 24.

China's crude throughput jumped 9% year on year to hit an all-time-high of 14.14 million b/d in June, General Administration of Customs data showed.

Persistent leaps in its throughput would help China continue to actively digest huge volumes of crude oil cargoes purchased during the second quarter.

The higher run rate in July is likely driven by Sinopec and PetroChina's flagship refineries, which resumed operations this month after undergoing maintenance works. This include Sinopec's 23 million mt/year Zhenhai Petrochemical and the 13.8 million mt/year Tianjin Petrochemical refineries, as well as PetroChina's 2.05 million mt/year Dalian Petrochemical refinery.

Moreover, Sinopec's new 10 million mt/year Zhongke Petrochemical has been running at 50% of its capacity in July after its official start on June 16, according to market sources.

The increased runs at these refineries have tempered the impact of throughput cuts by some of their peers, including those along the Yangtze River, after widespread flooding in about 23 provinces forced them to cut output on weakening consumer and industrial oil consumption and alter their scheduled maintenance plans, Platts data showed.

Platts collected information for 38 state-owned refineries in July, with a combined capacity of 8.6 million b/d covering 19 Sinopec refineries, 17 PetroChina refineries, and CNOOC's Huizhou Petrochemical as well as Sinochem's Quangzhou Petrochemical.

These refineries plan to process 7.2 million b/d of crude in July. Sinopec led the pack with a four percentage point increase in run rates from June, while PetroChina and CNOOC each raised rates by three percentage points.

In total, at least 20 state-owned refineries across the country, which have no maintenance plan, have cut run rates in July by 1-17 percentage points from June. These comprise seven refineries under PetroChina, 12 from Sinopec, and Sinochem's solo refinery Quanzhou Petrochemical.

The 8.5 million mt/year Sinopec-SK Wuhan Petrochemical cut the most, by 17 percentage points from June, to run at an average 82% of its capacity this month as heavy flooding interrupted transportation for sending out its oil products, Platts reported.

Wuhan is one of the cities in the middle-stream of Yangtze River that has been battered by recent floods.

Meanwhile, PetroChina's refineries - the 7 million mt/year Jinxi Petrochemical and the 5 million mt/year Ningxia Petrochemical - have been shut over the month for maintenance, capping the total throughput.

On the other hand, independent refineries' run rates still remain high despite declining slightly from June amid narrowing margins. They account for about 31% of China's refining capacity.

Zhejiang Petroleum & Chemical continued to operate at higher run rates of its nameplate capacity of 20 million mt/year in July, compared with 130% in June, while the 20 million mt/year Hengli Petrochemical (Dalian) lowered run rates slightly to around 108% in July, down from 115% in June, information collected by Platts showed.

The 45 small-scale independent refineries in Shandong province lowered their average run rate to around 72.7% as of July 22 from a record high of around 79% in June, according to local information provider JLC.

In contrast, the Shandong refineries' average run rate was at 60.2% in July 2019 and 72% in December 2019, when China's throughput hit the previous record high of 13.84 million b/d before the COVID-19 outbreak.

The average refining margin of the small-scale independent refineries was at Yuan 19/mt ($2.74/mt) in the week started July 19, dropping from about Yuan 285/mt in June, according to JLC.

As MRC wrote before, top Chinese state refiner Sinopec Corp said in mid-June it had started up a USD6 billion new refinery and petrochemical plant in south China, making it the countrys third integrated complex to start operations in the past 18 months or so. The Sinopec venture, situated in coastal city of Zhanjiang, comprises a 200,000 barrel per day (bpd) crude oil refinery and an 800,000 tonne-per-year ethylene facility, built at a cost of 44 billion yuan (USD6.2 billion), Sinopec said in a statement.

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

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, CNOOC, PetroChina, Sinochem, Sinopec, SK Corporation, Yantai Wanhua, Zhenhai Refining & Chemical Company, China, Russia.
Category:General News
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