Influence of LSFO Production on Refined Oil Output in China

SCI99

2020-01-15

Influence of LSFO Production on Refined Oil Output in China

China’s State Council has approved the fuel oil export tax rebate policy under general trade on January 8, but the detailed quotas were not released yet.

SCI reckons that the issuance of fuel oil export tax rebate policy will not only support the bonded bunker market in China but also relieve the oversupply in China’s refined oil industry to some extent.

According to SCI’s statistics, China’s output of refined oil is estimated to drop by 5.94 million mt (including 3.15 million mt gasoline and 2.79 million mt diesel) to produce 10 million mt low-sulphur fuel oil (sulphur content no more than 0.5%).

The methodology is as follows: first, SCI assumes that the 10 million mt LSFO is fully produced by hydrogenated residue, FCC diesel/general-purpose diesel and purified slurry oil, and therein, the sulphur content in hydrogenated residue, FCC diesel/general-purpose diesel and purified slurry oil is 0.4%, 1,000ppm and 1% respectively. Second, SCI assumes that some of the residue that normally used in residue-to-FCC gasoline and diesel is used in residue-to-LS bunker instead, and therefore, the operating rate of FCC units is affected to some extent. Third, SCI assumes that in the FCC units, the yield rate of FCC gasoline is 45%, and the yield rate of FCC diesel is 27%.

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