Aug Bitumen Output to Surge, but Profit Change Should Be Noticed
Snapshot: In July, the bitumen output remained rising. With the resolution of feedstock problems and the restart of overhauled refineries, the bitumen output in August is strongly expected to surge. However, the international oil price may continue moving up, strongly bolstering the bitumen cost and squeezing the production profit. Thus, the influence of the bitumen production profit on output should be noticed.
With the arrival of feedstock at independent refineries, some independent refineries have resumed bitumen production or run their units at higher loads in succession since middle and late July. The bitumen output continuously recovered from the low level in Q2. In July, China’s bitumen output increased by 218.4kt or 8.59% M-O-M. Therein, the output at Sinopec was stable at 850kt or so, while that at independent refineries increased by 150kt or 11% M-O-M. In August, all refineries resuming production in late July maintained normal operating rate. The bitumen output is expected to rise notably M-O-M in August, or even hit the annual high.
With higher cost, the profit of bitumen production was relatively weak.
In July, the international oil price rose notably bolstered by less macro pressure and strong fundamentals. Besides, the oil price still hovered at highs in August, bolstering the bitumen cost. Yet, the price of spot bitumen was weak compared with the international oil price, rendering more losses in the comprehensive profit of bitumen production.
According to SCI, the average bitumen production profit at comprehensive independent refineries in Shandong was RMB -343.23/mt from August 1 to August 16, which was RMB 66.33/mt or 23.95% lower than the average profit in July. However, the average profit of bitumen production at Shandong independent refineries was RMB 59.49/mt in H1, 2023. Thus, the current profit of bitumen production was weaker from H1, 2023.
The operating rate of bitumen units peaked and fell.
As refineries increased production and overhauled refineries resumed production, the operating rate of bitumen units rebounded notably in late July. The weekly operating rate reached 57.40% in early August, hitting a high in 2023. However, the weekly operating rate dipped by 2.12% in mid-August, as several refineries shut units for maintenance as scheduled. Thus, the operating rate of bitumen units peaked and fell.
At present, some refineries still have some previous low-priced feedstock for production, so the actual bitumen production may still be profitable. However, as the low-priced feedstock may be consumed and the international oil price is not expected to drop notably, the profit of bitumen production is likely to gradually shrink. Whether the bitumen output at refineries will remain high or not in September should be noticed.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
