China Refined Oil Output May Increase in Sep & Oct
According to the statistics released by the National Bureau of Statistics, in July 2019, China’s gasoline output was 11,403kt, up 2.06% from June but down 1.4% from last year. From January to July 2019, the total gasoline output was 81,535kt, up 2.0% from last year.
In July 2019, China’s diesel output was 13,560kt, up 4.27% from June but down 2.4% from last year. From January to July, the total diesel output was 94,348kt, down 7.1% from last year.
In July 2019, China’s kerosene output was 4,451kt, up 0.13% from June and up 7.6% from last year. From January to July, the total kerosene output was 29,548kt, up 7.1% from last year.
In July 2019, China’s crude oil processing volume was 52,595kt, down 2.05% from June. The decline of the crude oil processing volume was the major reason led to the limited increase of refined oil output. Moreover, many refineries were still in maintenance. Up to July 31, the average operating rate at state-owned refineries was 75.83%, down 1.95% from mid-July, and the average operating rate at Shandong independent refineries was 60.42%, down 0.78% from June. In terms of demand for refined oil, due to the high temperature, the utilization rate of cars’ air conditions increased, giving support to the demand for gasoline to some extent. However, the hot weather affected the operating rates at mining, infrastructural constructions and projects, and the demand for diesel was tepid. Therefore, on the whole, though the refined oil output in July went up, the increase was limited.
In the last several years, the diesel/gasoline output ratio at refineries kept dropping. In 2017, the average diesel/gasoline output ratio was 1.43, and in 2019, the diesel/gasoline output ratio declined to 1.16. SCI reckons that the main reason was that the gasoline consumption volume kept increasing, while the growth speed of diesel consumption volume kept slowing and even became negative sometimes. According to SCI’s statistics, in July 2019, the diesel/gasoline output ratio was 1.19, up 2.59% from June but down 2.46% from last year. The increase of diesel/gasoline output ratio was because many state-owned refineries raised their diesel output and decreased their gasoline output.
With the approaching of the refined oil market peak season in September and October, many refineries are likely to raise their operating rates. SCI reckons that even if the refined oil output does not surge in August, it will surge in September, and the diesel output will increase dramatically. Meanwhile, source said that Zhejiang Petrochemical will start normal refined oil production from late September, giving support to the total refined oil output.
As for diesel/gasoline output ratio, the increase of diesel/gasoline output ratio in July was a preparation for the refined oil market peak season in September and October, and in order to support the gasoline prices, many refineries declined their gasoline output to reduce the supply. However, the current diesel market is sluggish, and refineries are unlikely to raise diesel output for a long period. Therefore, SCI reckons that the diesel/gasoline output ratio will drop later.
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