Independent refiners in the Chinese province of Shandon pushed their run rates to a new record high monthly average of 79% in June from 77.9% in May, an industry survey showed. The higher runs came amid large inflows of crude oil imported over May to June and despite slightly weaker domestic refining margins.
Total crude oil imported by these refineries in June increased by 7% from May to a record 13.85 million tons in June. Margin to crack imported crude oil in China fell by CNY169/ton ($24 to around CNY285/ton last month, the survey showed.
According to the survey, Shandong independent refiners processed a total of roughly 11 million tons (2.7 million bpd) of crude in June, up 1.5% from May. The 45 surveyed refiners processed a total of 39 different imported crude grades last month, compared to 32 grades in the prior month.
The survey also noted a high volume of bitumen blend used as refinery feedstock in June. Yuhuang Petrochemical and Chambroad Petrochemical processed around 110,000 tons of bitumen blend last month, the highest since March 2018. Bitumen blend is the ideal feedstock to produce asphalt, which sees improving demand as road upgrades and paving works start in the summer.
These refiners’ overall gasoil sales decreased by 11% from May to June, reflecting weaker domestic demand. This resulted in a 1.38 million-ton (63.8%) month-on-month build in their gasoil inventories. Gasoil inventories have been climbing in the last two months as demand from construction projects and mining activities remained weak. A severe flood in South China also put pressure on gasoil demand which declined 5.4% from May to 5.31 million tons in June.
