Refinery throughput in China went up by 4 percent last month, to a total 52.6 million tons, or about 12.44 million bpd, Reuters reports, citing data from the National Bureau of Statistics.
That's down from a record-high processing rate of 12.68 million bpd, recorded first in January and February this year and then again in April. It is still pretty strong going thanks to higher demand for crude from independent refiners who are building new refining capacity.
Independent refiners currently account for about 30 percent of China's oil processing capacity, which stands at 15 million barrels daily and rising. According to an analysis from Bloomberg released in March, this year will see refining capacity additions of as much as 890,000 bpd.
With higher processing rates imports of crude also jumped in July. These averaged 9.66 million bpd, up by 14 percent on the year. The trend could soon reverse, however, as the country prepares for its National Day in October. The preparations involve reducing industrial activity to cut pollution levels. These reductions are seen affecting both imports and refinery processing rates during the third quarter of the year.
The rebound in refining rates is somewhat surprising as it comes amid a persistent glut of fuels, the result of increased independent refiner activity. This glut has led to a squeeze in refining margins both in China and in neighboring countries as the excess fuel spills into the rest of Asia. Yet the government once again granted generous crude import and fuel export quotas to refiners this year.
The July increase in imports also indicates strong oil demand, but U.S.-Chinese trade tensions have had some analysts worrying that U.S. oil could fall victim to the tariff war. Even the risk of tariffs is reason enough for Chinese refiners to choose another source of oil as they did last year when trade tensions spiked.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More