Major Chinese Refineries to Increase Output for Second Time in Six Months

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Researched by Industrial Info Resources (Sugar Land, Texas)--Major Chinese refineries are planning to increase crude-oil processing volume in April 2009. This will be the second time to raise output in the past six months. An increasing number of signals indicate that the Chinese economy is recovering, which could lead to increased demand in oil, alleviating the problem of large petroleum-product inventories.

As reported, the daily crude-oil processing volume of 12 major refineries in China will reach 2.43 million barrels in April, about 3% higher than the 2.36 million barrels processed in March 2009. These refineries are mainly distributed in the southeast coastal regions and account for more than one-third of the total processing capacity in China. According to the statistics of China Oil and Chemical Industry Association, China's crude oil consumption reached approximately 7.5 million barrels per day (BBL/d) and the processing volume reached about 7.3 million BBL/d.

The expected processing volume in April accounts for about 86% of the total production capacity of these refineries, which is far beyond the level of 80% in December last year, but lower than the high of nearly 100% prior to the Beijing 2008 Olympic Games.

At the end of November 2008, the stockpile of major Chinese oil companies reached the historic high of 745,000 barrels. At the end of February 2009, the stockpile of gasoline at China National Petroleum Corporation (Beijing) and China Petroleum and Chemical Corporation (NYSE:SNP) (Sinopec) (Beijing) dropped 2.7% to 31.9 million barrels year over year, and the stockpile of diesel also dropped 0.2% to 53.7 million barrels. This is the first inventory drop in recent months.

The Chinese government recently launched a series of policies to promote the development of the automobile industry, which resulted in a sharp increase in vehicle sales. The recent surge of the vehicle market could possibly promote the consumption of gasoline in China in the coming months.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.