Combined run rates at China's independent refineries in eastern Shandong province edged up to average 65.2% capacity in December, rebounding marginally after retreating from an eight-month high of 67.4% in October, according to a monthly survey by local information provider JLC.
This brings the average run rate to 63.1% in 2018, up from 59.9% in 2017, although the December rate was still lower from a record high of 69.5% in December 2017.
The increase was mainly attributed to the restart of several refineries from maintenance, though a few refineries have also shut or have cut throughput due to negative refining margins.
A combined 6 million mt/year capacity from three refineries have restarted in December. But another four refineries cut throughput, with Qinyinshan Petrochemical and Lanqiao Petrochemical even suspending operations for a while because of refining losses.
Refining margins for processing imported Oman crude have slipped further into negative territory, to a loss of around Yuan 286/mt ($42/mt), down by Yuan 112/mt theoretically from November, according to JLC.
For January, run rates are likely to remain rangebound from December, according to refinery sources, amid hopes that current high oil product stocks would ease marginally after the recent rebound in international oil prices.
JLC's survey covered 43 independent refineries accounting for about 58% of the country's total independent capacity. JLC is a Beijing-based information provider, formerly known as JYD.
GASOLINE, GASOIL STOCKS HIT 22-MONTH HIGH
Combined stocks of gasoline and gasoil climbed 15.1% month on month to a 22-month high of 1.25 million mt in December.
Among this, gasoline stocks surged 29% to 430,000 mt.
The sharp rise was mainly attributed to an increase of 12.4% in gasoline output, as refineries lifted production in the hope of meeting the higher gasoline demand around the New Year holiday. But actual sales rose just 3.4% month on month.
Meanwhile, gasoil stocks continued building to a 65-month high of 820,000 mt -- the highest since July 2013 -- and up 9% from 750,000 mt in November.
The buildup in gasoline and gasoil stocks came as crude oil and oil product prices fell, keeping buyers from replenishing stocks.
"The price has been falling for most of the month in December, and no one would like to buy since the price is poised to go down further," a refinery source said.
The price of 92 RON gasoline fell by Yuan 560/mt to around Yuan 6,700/mt, while gasoil dropped by Yuan 1,000/mt to around Yuan 5,900/mt over the month, according to JLC.
FEEDSTOCK CONSUMPTION AT NEW RECORD HIGH
Combined feedstock consumption at the 43 surveyed refineries hit a fresh record high of 9.365 million mt in December, up 0.9% month on month. It was also up 0.6% from the previous high of 9.31 million mt in October.
Apart from 40,000 mt of bitumen blend shared equally by Yuhuang Petrochemical and Xintai Petrochemical, all the feedstock processed last month was crude, with imported crude accounting for 84.4%.
Of the imported crude grades processed by over 30 Shandong-based independent refiners with crude import quotas, ESPO Blend remained at the top of the list at around 1.53 million mt, up 2.3% month on month.
Djeno and Basrah grades were next, with consumption increasing 42.2% and 166.7% respectively from November to 640,000 mt each.
But demand for Lula crude fell 48.6% month on month to around 570,000 mt.
Meanwhile, consumption of Merey crude continued falling to around 210,000 mt, the lowest after February 2013 when it was at 170,000 mt. It was also down 61.4% from an average of 544,000 mt over January-November 2018.
Dongming Petrochemical imported around 80,000 mt of Long Lake crude last month for the purpose of producing asphalt.
The low availability of Merey crude has forced independent refineries to find substitution feedstock for asphalt production such as Cold Lake, Long Lake, Kuwaiti or Basrah grades.
