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Chinas small refineries forced to cut production

March 10/2011

(ICIS) -- Chinas small- and medium-sized refineries are being forced to cut production or shut down operations in the face of soaring international crude prices, which were eating into their margins, said analysts and an industry source on Thursday. Operating rates at these refineries are currently at 46.4%, said the industry source.

With global oil prices continuing to surge amid continued political unrest in parts of the Middle East and north Africa, refiners are dealing with unabated uptrend in crude processing costs.

In China, crude processing cost increased to yuan (CNY) 5.650/tonne ($861/tonne) in March, up CNY 300/tonne from February, with refiners profit shrinking to CNY 80/tonne from more than CNY 400/tonne last month, the source.

Given government controls on domestic fuel prices, these refiners could not pass on the high cost to customers.

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