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Chinese refineries processed 50.31 million tons of crude oil in August, the lowest since December 2017, calculations by Reuters based on data from the National Statistics Bureau showed. On a year-on-year basis, however, the amount was 5.6 percent higher.
Over the period January-August 2018, refineries’ throughput totaled 400.41 million tons, which was 8.7 percent higher than in the comparable period in 2017.
Refinery throughputs in the world’s second-largest consumer of oil were earlier this year affected by a tax regime overhaul that squeezed the profit margins of the so-called teapots—the independent refiners that have spearheaded China’s oil consumption increase in the last three years.
Yet run rates are beginning to recover, the latest data suggests. Earlier this month, S&P Global Platts reported that teapot refiners raised run rates to 59 percent of capacity in August, up from 52.5 percent in July, the lowest in 19 months, resulting from maintenance work. September rates are likely to remain at roughly 60 percent, the data provided by a Chinese information provider suggested.
The teapot refineries have 61.59 million tons of crude oil import quotas left this year, S&P Global Platts reported separately, after an August intake of foreign oil surprised the market with a decline versus an expected pick-up as a result of the end of maintenance season. An active typhoon season made it harder for vessels to dock and was in part at least responsible for the draw in imports. The other factor was the refiners’ tighter cash reserves following the tax regime overhaul.
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Over the first eight months of the year, according to Platts data, teapots imported 64.38 million tons of crude, which was just 0.6 percent higher than in January-August 2017, again because of tighter cash.
Whether or not teapots will fill their remaining quotas has yet to be seen, as their financial position changes and as the ongoing U.S.-China trade conflict worries the market with uncertainties about the future of Chinese oil demand.
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.