(Bloomberg) -- Oil refineries in China, the world’s biggest crude importer, may increase processing rates to near last year’s average levels this month, providing a glimmer of hope to a global market reeling from the coronavirus.
Throughput at state-owned majors and independent refiners is likely to rise to 13 million barrels a day this month from 12 million in March, according to senior officials at the nation’s top processors. The monthly average in 2019 was 13.4 million barrels a day, data compiled by Bloomberg show.
State-owned giants such as Sinopec are preparing to restore more capacity as the central government pushes for a recovery in industrial activity to shore up economic growth, according to the officials who asked not to be identified as they aren’t authorized to speak publicly. Meanwhile, processing at private oil refiners, known as teapots, will continue to increase with some idled plants set to resume in April, Chinese industry researcher SCI99 said.
“China’s epidemic situation is well controlled and demand is steadily picking up,” said Liu Feng, a senior analyst at SCI99. “Refinery profits are now very good” and the teapots in Shandong province may increase run rates to 75% of capacity by the end of the month from 70% now, he said.
Throughput at Chinese refineries should climb to about 12.5 million barrels a day this week from almost 12 million barrels last week, said the officials. Processing rates dipped briefly to as low as 9 million barrels a day as the virus peaked in China in February.
Sinopec, the country’s largest processor, has started a program to increase efficiency this quarter, it said in a statement last month. The campaign includes adjusting the diesel-gasoline ratio in its refineries and lowering inventories gradually, it said.
Nobody responded to emails sent to Sinopec and PetroChina seeking comments on Monday, a national holiday.
The country’s two latest mega-refining projects -- Hengli Petrochemical Co. and Zhejiang Petroleum & Chemical Co. -- are both ramping up production to match or exceed full nameplate capacity, SCI99’s Liu said. The Zhejiang complex may become the first Chinese private refiner to be allowed to export fuel since 2016 after Beijing offered support for the region’s free trade zone.
Oil resumed gains on signs the world’s biggest producers are moving toward a deal to call off their price war and cut output. Brent for June delivery added 2.9% to $34.01 a barrel on the ICE Futures Europe exchange as of 12:43 p.m. in Singapore.
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