Q1 Bitumen Output Rises by 2.12% Y-O-Y While That in Independent Refineries Falls
Snapshot: With weak demand in the market and low profits of bitumen production, the bitumen output in Q1 only rose by 132.2kt or 2.12% Y-O-Y. Although the demand in Q2 is likely to rebound somewhat Q-O-Q, the profits of bitumen production may improve limitedly as the international crude oil price is highly likely to trend up. It is predicted that the bitumen output in Q2 may rise Q-O-Q but decline Y-O-Y.
In Q1 of 2024, China’s bitumen output was 6,378.2kt, only up 132.2kt or 2.12% Y-O-Y. Q1 saw the weakest end demand for bitumen in the whole year, so refineries lowered their operating rates of bitumen production to avoid pileups in the inventory. Meanwhile, as the crude oil price fluctuated upwards and the price of spot bitumen hovered at lows, the profits of bitumen production were low. Thus, the operating rates at some independent refineries were low, leading to a limited Y-O-Y increase in the bitumen output in Q1.
As seen from regions, Shandong, East China, North China, South China and Northeast China were still major producing regions of bitumen. In Q1, the bitumen output in Shandong and East China decreased Y-O-Y. Therein, that in Shandong fell by 839.1kt or 32.09% Y-O-Y, and that in East China fell by 131.8kt or 8.43% Y-O-Y, mainly as the operating rates were low dragged by weak profits. Yet, in Q1, the bitumen output in South China and North China increased notably. Therein, that in South China increased by 433.3kt or 101% Y-O-Y, and that in North China rose by 184.1kt or 22.52% Y-O-Y. As the output at Sinopec Maoming Company, Sinopec Guangzhou Petrochemical Company and Hebei Xinhai Chemical Group was high, the overall output in South China and North China saw Y-O-Y increases.
In Q2, the international crude oil price is likely to fluctuate upwards, strongly bolstering the bitumen costs. Besides, the price spread between feedstock and crude oil may not narrow down, so the profits of bitumen production are expected to hardly improve. The operating rates at some independent refineries may remain low. Therefore, the bitumen output is expected to see a Q-O-Q increase in Q2, but the increment may be limited, and it is highly likely to decline Y-O-Y.
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