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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Refinery activity in China is down and imports in July slumped to their lowest levels since 2022, indicating that the nation's oil sector is soft. Additionally, two refineries whose output totals 136,000 barrels per day (BBL/d), are either shutting down or are delaying a restart after a planned turnaround that began in July 2024. China is the world's largest crude oil importer.
The Shutdowns
Shandong Changyi Petrochemical Company Limited plans to permanently close its 100,000-BBL/d Changyi refinery in China by November following a bankruptcy declared by the Changyi Court on September 20. The refinery is currently undergoing a plant-wide shutdown due to those financial issues. Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can click here for the plant profile.
Also, Rizhao Lanqiao Petrochemical Company Limited, owned by Shandong Haiyou Petrochemical Group Company Limited, has delayed the restart of the 20,000-BBL/d delayed coker unit (DCU) and 16,000-BBL/d gasoline hydrotreater at its 70,000-BBL/d Rizhao Refinery due to poor demand and low refining margins. These units have been undergoing a planned turnaround since July 10. They were previously scheduled to restart by September 20, but that restart is now scheduled for October 25. Also, on December 15, 2023, the unit's lone crude distillation unit (CDU) was shut down due to insufficient feedstock, and no restart date has been set. Subscribers can click here for the plant profile.
Refining Slowdowns and Crude Oil Stockpiling
Just one year ago, China set an all-time record for refinery throughput, averaging 14.8 million BBL/d, according to the U.S. Energy Information Administration (EIA). But in July 2024, that level dropped to just 13.91 million BBL/d, 6.1% less than the same month in 2023, and the weakest since October of 2022, according to Reuters.
By comparing the nation's crude imports with its announced refinery runs, Reuters has calculated that difference in estimating amounts of oil sent to storage.
Reuters shows a surplus of 280,000 BBL/d and, for the period of January to July 2024, a total surplus of 800,000 BBL/d, which likely went into storage.
With Brent crude prices in the low $70s per barrel in recent weeks, some believe this storage uptick will allow China some buffer should international situations including Middle-East crises, faster demand growth in the rest of the world or supply tightening by OPEC+ inflate prices. In such an event the country could reduce imports and refine more of its less-expensive stockpile for at least a few months.
It's The Economy
Reuters also reports that China, the world's second-largest economy, grew by 4.7% from April to June 2024, slowest since first-quarter 2023 and less than the 5.1% expected in a poll by that organization. This slower-than-expected growth could be part of the oil equation. Indeed, OPEC+ slightly revised downward its demand expectation for China in its most recent monthly forecast.
According to Hydrocarbonprocessing.com, both diesel and gasoline consumption have been below expectations. The broad economic slowdown is part of the issue, but for diesel it is also due to its being replaced more and more by cheaper and cleaner liquefied natural gas (LNG) as a truck fuel.
Regarding gasoline, in the last week of September, Sublime China Information, a local commodities consultancy, wrote, "Although gasoline use hits a peak season as more people take to the roads, overall use of the motor fuel is below year-ago levels." Industrial Info's Geoffrey S. Lakings added that the nation's move toward electric vehicles (EV) is responsible for some of the drop in gasoline demand.
Lakings said, "As the world's largest oil importer, the exporting world looks to China as a bellwether of crude oil demand and pricing structure across the board."
New Chinese Refining Capacity May Complicate Matters
On the other hand, on September 25, Shandong Yulong Petrochemical Company Limited's Nashan Yulong Grassroot (NYG) refinery's 200,000-BBL/d CDU 2 began its trial run, with a goal of going commercial in November, depending on the testing results.
Located in Shandong Yantai, China, the refinery's total capacity is 400,000 BBL/d, and the total investment value (TIV) is US$150 billion. NYG's project kickoff date was in early first-quarter 2021. Industrial Info will continue to monitor this project for further developments. Subscribers can click here for the plant profile.
Exactly how or if this will affect Rizhao Lanqiao's restart remains to be seen. Industrial Info will continue to monitor this market for updates.
Subscribers can click here for all the plant profiles mentioned in this article.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
The Shutdowns
Shandong Changyi Petrochemical Company Limited plans to permanently close its 100,000-BBL/d Changyi refinery in China by November following a bankruptcy declared by the Changyi Court on September 20. The refinery is currently undergoing a plant-wide shutdown due to those financial issues. Subscribers to Industrial Info's Global Market Intelligence (GMI) Petroleum Refining Plant Database can click here for the plant profile.
Also, Rizhao Lanqiao Petrochemical Company Limited, owned by Shandong Haiyou Petrochemical Group Company Limited, has delayed the restart of the 20,000-BBL/d delayed coker unit (DCU) and 16,000-BBL/d gasoline hydrotreater at its 70,000-BBL/d Rizhao Refinery due to poor demand and low refining margins. These units have been undergoing a planned turnaround since July 10. They were previously scheduled to restart by September 20, but that restart is now scheduled for October 25. Also, on December 15, 2023, the unit's lone crude distillation unit (CDU) was shut down due to insufficient feedstock, and no restart date has been set. Subscribers can click here for the plant profile.
Refining Slowdowns and Crude Oil Stockpiling
Just one year ago, China set an all-time record for refinery throughput, averaging 14.8 million BBL/d, according to the U.S. Energy Information Administration (EIA). But in July 2024, that level dropped to just 13.91 million BBL/d, 6.1% less than the same month in 2023, and the weakest since October of 2022, according to Reuters.
By comparing the nation's crude imports with its announced refinery runs, Reuters has calculated that difference in estimating amounts of oil sent to storage.
Reuters shows a surplus of 280,000 BBL/d and, for the period of January to July 2024, a total surplus of 800,000 BBL/d, which likely went into storage.
With Brent crude prices in the low $70s per barrel in recent weeks, some believe this storage uptick will allow China some buffer should international situations including Middle-East crises, faster demand growth in the rest of the world or supply tightening by OPEC+ inflate prices. In such an event the country could reduce imports and refine more of its less-expensive stockpile for at least a few months.
It's The Economy
Reuters also reports that China, the world's second-largest economy, grew by 4.7% from April to June 2024, slowest since first-quarter 2023 and less than the 5.1% expected in a poll by that organization. This slower-than-expected growth could be part of the oil equation. Indeed, OPEC+ slightly revised downward its demand expectation for China in its most recent monthly forecast.
According to Hydrocarbonprocessing.com, both diesel and gasoline consumption have been below expectations. The broad economic slowdown is part of the issue, but for diesel it is also due to its being replaced more and more by cheaper and cleaner liquefied natural gas (LNG) as a truck fuel.
Regarding gasoline, in the last week of September, Sublime China Information, a local commodities consultancy, wrote, "Although gasoline use hits a peak season as more people take to the roads, overall use of the motor fuel is below year-ago levels." Industrial Info's Geoffrey S. Lakings added that the nation's move toward electric vehicles (EV) is responsible for some of the drop in gasoline demand.
Lakings said, "As the world's largest oil importer, the exporting world looks to China as a bellwether of crude oil demand and pricing structure across the board."
New Chinese Refining Capacity May Complicate Matters
On the other hand, on September 25, Shandong Yulong Petrochemical Company Limited's Nashan Yulong Grassroot (NYG) refinery's 200,000-BBL/d CDU 2 began its trial run, with a goal of going commercial in November, depending on the testing results.
Located in Shandong Yantai, China, the refinery's total capacity is 400,000 BBL/d, and the total investment value (TIV) is US$150 billion. NYG's project kickoff date was in early first-quarter 2021. Industrial Info will continue to monitor this project for further developments. Subscribers can click here for the plant profile.
Exactly how or if this will affect Rizhao Lanqiao's restart remains to be seen. Industrial Info will continue to monitor this market for updates.
Subscribers can click here for all the plant profiles mentioned in this article.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
