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China refinery throughput rose to the highest in 12 months in November, reaching 14.5 million barrels, Reuters reported, which made it the third-highest daily throughput rate on record.
The increase, after ten months of somewhat subdued activity amid lockdowns and weak domestic fuel demand, came amid a looming global shortage of diesel that pushed up refining margins, stimulating refiners to ramp up production, especially with the new batch of export quotas issued by Beijing.
Two new refinery starts also contributed to the increased refinery output. The first one was a facility operated by PetroChina, with a capacity of 200,000 barrels daily, and the second one was built by independent refiner Shengdong Petrochemicals, with a capacity of 320,000 bpd.
Access to discount Russian crude oil has also helped Chinese refiners raise their run rates and boost their margins, too. China has signaled it will not observe the G7 price cap that came into effect last week and will continue buying Russian oil regardless of the price.
It will also continue exporting growing volumes of diesel in all likelihood. Europe is currently on a buying spree for Russian diesel before the EU embargo on Russian fuels comes into effect in February, but after that it will need to switch sources and China is an obvious choice.
The country’s exports of diesel are already on the rise, almost doubling in October from a year earlier, at 1.05 million tons. For November, some analysts predicted even higher export rates for all fuels.
Reuters reported earlier this month that China’s fuel export rates could hit another record at the end of the year. Exports of gasoline, diesel, and jet fuel could reach in December between 6.5 million tons to 7.1 million tons, according to oil research and consultancy firms and trading sources, the report said.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com