Bitumen Output Decreases by 3.89% M-O-M in May
Snapshot: In May, the bitumen output at independent refineries edged up, but that at Sinopec declined notably, leading to a fall in the overall bitumen output. In June, the bitumen output is expected to continue to fall amid weak end demand and high social inventory.
The bitumen output in May dropped M-O-M.
In May, China’s bitumen output fell by 3.89% M-O-M to 2,175.3kt. In May, the international oil price dropped, and the backwardation of cutback bitumen slid, resulting in a fall in the cost of bitumen production. Although the profits of bitumen production remained negative, they improved somewhat from the lowest point in 2024, spurring the production enthusiasm at some independent refineries. Yet, curbed by the weak demand, sales of bitumen at state-owned refineries faced high pressure, resulting in a notable fall in output. Thus, the overall bitumen output in May saw a M-O-M decline.
In May, the bitumen output at independent refineries inched up, but that at Sinopec fell notably.
With the improvement of production profits, the bitumen output at independent refineries in May rose M-O-M. Yet, as the profits remained negative, the increment in the output was only 35kt. Due to the rainy weather in southern regions, end users consumed resources slowly. Thus, some of Sinopec’s refineries in South China and East China cut production to ease the supply pressure, leading to a M-O-M fall of 180kt in the bitumen output at Sinopec. Besides, the bitumen output at PetroChina and CNOOC saw an uptick.
In June, the operating rate of the bitumen industry hovered at lows, and the output may continue to fall.
In June, some refineries including Shandong Landbridge Petrochemical, Shandong Haiyou Petrochemical Group, and Henan Fengli Petrochemical postponed the production of bitumen. Besides, the units at Shandong Dongming Petroleum & Chemical Group and Shandong Dongfang Hualong Group began to take maintenance. Some major refineries of Sinopec in East China cut production. Thus, the operating rate of the bitumen industry fluctuated downwards in June. By June 12, the average operating rate of the bitumen units was 29.99%, down 4.37 percentage points from May. Although some refineries plan to switch to bitumen production in late June, the operating rate may still further slide.
In June, the rigid demand for bitumen failed to improve notably. Besides, the middle and lower reaches of the Yangtze River region will enter the rainy season, subduing the market expectations. Although some refineries plan to switch to bitumen production in late June, the high inventory and slow consumption will possibly curb the release of bitumen output. It is projected that the bitumen output may fall to 2,100-2,150kt.
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