China Crude Throughput to Decline Through 4Q23

China’s crude throughput is set to decline this month and for the rest of this quarter due to maintenance, softer domestic demand, narrowing oil product exports access and feedstock shortage, traders and analysts told S&P Commodity Insights.

• Average utilization rate of China’s state-owned refiners covered by S&P fell to the lowest level in four months to 83% in October, as four out of the 50 refineries were under maintenance. This was still up from 80.2% in October 2022.
• These refineries targeted to process 8.84mbpd of crude in the month, compared to their combined primary capacity of 10.66mbpd according to S&P.
• Market participants expect crude throughput to be lower for the entire fourth quarter, after reaching a record high of 15.54mbpd in September, according to data from the National Bureau of Statistics.
• "After the week-long holiday the demand for oil products has softened, while limited oil product exports quota availability also narrows products outlet, weighting on throughputs," a refining source with Sinopec said. Another refinery source at Sinopec revealed that they are likely to cut throughputs in November amid rising stocks, especially gasoline.
• Both state-run and independent sectors cut throughputs in October. Small independent refineries have not only suffered from limited crude import quota availability as their refining margins of processing imported crude feedstocks has already fallen into the negative territory as of 25 October from Yuan 161/mt ($3/b) as of 27 September, according to local information provider JLC.
• "The demand for oil products has been weak and the stocks of gasoline have been relatively high," said a Sinopec refinery source.
• "The export margins for gasoline are not good, also there are not enough quotas left to export, so refineries will probably have to cut throughputs to avoid the product stocks piling up," added the source.
• "Many refineries are ready to cut throughputs in the near future due to weak refining margins," a JLC analyst said.