Beijing — China refined 2% less oil in March than a year earlier, with throughput falling to its lowest level since October as a surge in crude oil prices squeezed margins and tight COVID-19 lockdowns hurt fuel consumption.
Refining volume last month was 58.59 million tonnes, equivalent to 13.8 million barrels per day (bpd), data from the National Bureau of Statistics (NBS) showed on Monday.
That compares with 14.08 million bpd in March 2021 and 13.98 million bpd in the January-February period this year.
Global crude oil benchmarks soared to nearly $140 a barrel in early March over fears of supply disruption following Russia’s invasion of Ukraine. The price risehurt refining margins. Russia calls its actions in Ukraine a “special operation”.
First-quarter throughput in China fell 1.5% year-on-year to 171.44 million tonnes, or 13.91 million bpd, the data showed.
Analysts estimated that refining margins at Chinese refineries plunged to near zero in March from close to 2,000 yuan ($314) a tonne in February.
China’s independent refiners operated at 52.15% of capacity at the end of March, compared with 60.93% early in the month, data tracked by Shandong-based consultancy Sublime showed.
Operating rates also drifted lower at state-backed refiners in March as capacity of about 460,000 bpd was taken offline for maintenance.
The reduced oil throughput also came as cities across China, including financial hub Shanghai, implemented stringent mobility restrictions to contain a new wave of COVID outbreaks.
Chinese refiners are set to further lower throughput in April with a cut equivalent to 6% of average output in 2021, as authorities’ zero-COVID measures cut deeper into fuel use.
Meantime, the NBS data showed a robust 3.9% year-on-year increase in crude oil production to 17.71 million tonnes last month, the strongest since 2016, as national oil giants followed Beijing’s order to boost domestic-supply security.
Production in the first quarter rose 4.4% on a year earlier.
Natural gas production grew 6.3% in March over the year-earlier level to a record 19.7 billion cubic meters and output for the year to date gained 6.6%.
*Chen Aizhu & Muyu Xu; Editing: Christopher Cushing & Bradley Perrett – Reuters
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