China's gasoline and gasoil production is expected to hit a new low among the past seven Novembers since 2017. The gasoline production is projected to fall 10.3% month on month (MoM) and 3.62% year on year (YoY) at 13.59 million tonnes in November 2023, while gasoil is likely to see a monthly drop of 11.7% and an annual decrease of 11.9% at 18.59 million tonnes, based on OilChem statistics.
Source: Mysteel OilChem
The production cut was primarily due to falling capacity utilization rates, as there was no extensive maintenance in November, per OilChem survey.
The state-owned refineries lowered their production plans for November in the first place based on their in-plant stocks as well as pessimism over the follow-up consumption. The independent refineries' production was mainly weighed on by narrowing refining profits.
Low production became the core factor supporting refined oil prices in November.
In detail, China's gasoline and gasoil prices averaged Yuan 8,473/tonne and Yuan 7,593/tonne respectively as of November 27, down slightly 0.43% and 1.55% from the beginning of the month, indicating relatively resilient price performance on the backdrop of greatly falling international crude oil prices, with WTI crude losing 5.49% during the same period.
Source: Mysteel OilChem
The refined oil prices also gained support from falling refined oil inventory, due to palpable production cuts, though the consumption was bearish. In detail, the commercial inventory of gasoline and gasoil dropped 0.42% and 6.24% respectively as of November 23 from the beginning of the month.
Looking ahead over December, the state-owned refineries' capacity utilization rates are likely to fall further, according to the production schedules learned by OilChem. Though the independent refineries, namely Baolai and Zhenghe Huaxing, are likely to resume the production, the increase is expected to be insignificant.
Regarding refined oil prices, both the prices of gasoline and gasoil have shown signs of bottoming out. Gasoline prices are projected to rebound amid rebounding demand and low production in December. For gasoil, the consumption is expected to stay weak, but there is possibility of an early rebound with the early end of the peak season.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com
