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China Refiners’ Run Rates At Record High In September

Chinese refiners processed a record daily amount of crude oil last month, Reuters reports, citing calculations based on Chinese statistical data. At a calculated 12.49 million bpd, the September run rate of Chinese refineries was more than 600,000 bpd higher than the August figure.

The increase reflected an increase in crude oil imports, which hit a four-month high in September. Domestic production, on the other hand, declined by 2.4 percent to 3.69 million bpd. Nine-month production also declined, the statistical data showed, to 3.77 million bpd, down 1.9 percent.

The news about the record-high September run rates bodes well for future demand after an extended period of falling imports and run rates amid summer maintenance season and adjustments to a new tax regime that has stripped teapot refiners of some tax incentives and hurt their bottom lines.

As a result, in August the total refinery throughput in the country slipped to the lowest since December 2017, although the eight-month average turned out to be 8.7 percent higher than a year ago.

The teapot refineries have 61.59 million tons of crude oil import quotas left this year and they might will probably increase their intake of foreign oil by 23.9 percent to 2.1 million bpd this month, a recent survey from S&P Global Platts suggested. The total for the month, according to the survey, will come in at 9 million tons, which is up from 7.26 million tons for September and will also be driven by falling inventories that need filling up and the nearing end of the year: teapot refiners, as they are commonly called, must use their import quotas before the new year starts.

Refinery production will also rise at facilities operated by the state giants as they complete scheduled repairs and maintenance. Demand for fuels on the local market will remain strong over the short term.

By Irina Slav for Oilprice.com

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