Singapore —At least three Chinese state oil refineries and a privately run mega refiner are considering increasing runs by up to 10% in October from September, eyeing stronger demand and a possible surge in fourth-quarter fuel exports, people with knowledge of the matter said.
Chinese refiners are expecting Beijing to release up to 15 million tonnes worth of oil products export quotas for the rest of the year to support the no. 2 economy’s sagging exports. Such a move would signal a reversal in China’s oil products export policy, add to global supplies and depress fuel prices.
After a recent slide in benchmark Brent crude prices to below $100 a barrel, Chinese refiners have taken arbitrage opportunities to boost stockpiles, traders said, booking supertankers to haul crude oil to China from the Americas and Middle East.
An official with a state refinery said his plant is eyeing a 10% hike in runs from September to about 240,000 barrels per day (bpd). “We’re raising runs next month in preparation for a possible opening in exports, though nobody has a clear idea how big the opening would be,” the official said.
A second official with another state refinery said his plant is also planning about an 8% hike in throughput next month, but added that the plan had been driven by firmer domestic margins. A third state refinery expects to restart a 60,000-bpd crude unit next month after maintenance, one of the sources said
China’s single largest refinery Zhejiang Petrochemical Corp, which is capable of processing 800,000 barrels per day of crude, is aiming to ramp up runs in the coming months from the current levels of 700,000-750,000 bpd, according to two sources familiar with its operations.
A ZPC representative confirmed the firm is considering a run increase due to signs of economic recovery, but declined to elaborate further.
Average refining rates at China’s state-owned refineries had climbed to 73.74% as of last week, up 2.56% from end-August, according to Chinese brokerage SHZQ Futures.
Run rates at independent refineries in Shandong, whose combined refining capacity accounts for a fifth of China’s total, also rebounded last week after falling for five weeks since mid-July.