Shandong May 12 2022: Feedstock consumption at Shandong’s independent refineries continued to fall and hit a 26-month low in April amid weak refining margins, data form local information provider JLC showed on May 12.
The volume fell 9.1% from March to 7 million mt, which was also a six-month consecutive fall since November 2021.
The weak refining margins resulting from high crude prices and weak sales of oil products hurt the overall run rates in April, JLC said.
The theoretical refining losses from processing imported crudes were around Yuan 224 ($33.32)/mt, compared to a loss of just Yuan 1/mt a month earlier, according to JLC’s calculation.
As a result, a combined refining capacity of around 45 million mt/year was shut down in April, after the resurgence of COVID-19 cases in the country.
Starting from second-half April, Shandong independent refineries have lifted crude throughputs with margins getting better amid easing of COVID-19 restrictions in the province.
Accordingly, stocks of gasoil and gasoline also declined. Gasoline stocks dropped 28.9% month on month to around 430,000 mt, while gasoil stocks eased by 37% from March to 540,000 mt.
This was mainly due to the improving demand in driving, while demand for gasoil from construction projects have been slightly better.
In May, around five independent refineries are expected to restart from maintenance gradually, which will help boost throughputs. These include Shangneng Petrochemical, Lianhe Petrochemical, Tianhong Chemical.
In the first week of May, the weekly run rates at the surveyed 40 independent refineries were at around 53.2% as of May 5, about 1.6 percentage points higher from the week earlier, according to JLC.
