China's May crude stockbuild rises on lower refinery runs

2013-06-24

China experienced a surplus of crude supply in May as refiners used lower volumes than were imported and domestically produced, implying additions to China's crude oil inventory, according to Platts analysis of recently released government data.

The crude stockbuild averaged 592,000 b/d in May, the highest level since May 2012, when the stockbuild touched 1 million b/d on the back of record high crude imports.

Platts calculates China's net crude stock drawdown or build by subtracting refinery throughput from the country's crude oil supply, which takes into account net imports and domestic production of crude. The level of stocks held by refiners is not disclosed.

The stockbuild last month continued from April amid low oil demand growth. Prior to that, there had been five consecutive months of net drawdowns since November last year.

The higher stockbuild in May was due mainly to lower refinery operating rates and a slight gain in net crude imports compared with April.

Refinery runs in May had fallen by 1.4% month-on-month to 9.24 million b/d, according to National Bureau of Statistics data released June 9, while crude imports edged up 0.4% to 5.66 million b/d, according to data from the General Administration of Customs released June 8.

Crude exports in May fell 39.5% year-on-year but rose 30% month-on-month to 26,000 b/d, bringing net crude imports for the month to 5.64 million b/d, an increase of just 0.3% from April.

From January to May, China's stockbuild has averaged 198,000 b/d, compared with 453,000 b/d during the same period last year, mainly because of higher refinery runs and lower net crude imports.

REFINERY RUNS TO REBOUND FROM JUNE

Refinery runs in April and May fell compared with the first quarter of this year due to seasonal maintenance.

However, they are expected to have rebounded this month following the return of several major plants that were offline for maintenance, including the 120,000 b/d crude distillation unit in Daqing Petrochemical, the 160,000 b/d CDU at Fushun Petrochemical and the 200,000 b/d Qinzhou refinery in southern Guangxi province.

In addition, refiners are also likely to lift run rates as June is the start of peak summer demand season, said Beijing-based 3E consultancy in its China Oil Monthly report released last week.

"Along with relaxed plant turnarounds and the market expectation of seasonally increasing oil consumption toward early summer, domestic refiners are lifting overall plant operations in June."

However, fundamental oil demand still remains weak in China, and this could put downward pressure on runs, it noted, adding that average refining capacity utilization -- across state and independent refineries -- in June will continue staying below 63%. 3E said it expected low utilization in many of state refiner China National Petroleum Corp.'s facilities across northern China.

Source from : Platts

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