China refined oil production projected to fall in 2024

It is projected that China's refined oil production will drop in 2024 from the level in 2023 primarily due to slightly more extensive maintenance plans of state-owned refineries, insufficient feedstock supply to independent refineries, in addition to the bearish consumption outlook.

China's gasoline and gasoil production is estimated to reach 175.81 million tonnes and 234.3 million tonnes respectively in 2023, rising 3.79% and 4.15% year on year (YoY), based on available data from OilChem.

Source: Mysteel OilChem

The production was relatively high over March-October 2023 thanks to lucrative refining profits and balanced supply and demand, but dropped rapidly in November when the refining profits narrowed, the consumption fell short of expectations, and the independent refineries lacked crude oil import quotas.

Looking ahead, the production losses stemming from regular maintenance of CDU units are estimated to rise compared with 2023 based on the state-owned refineries maintenance plans for 2024.

The state-owned refineries will put 14.49 million tonnes/year CDU capacities into maintenance in 2024 for an average of 50 days, equaling to reducing the total throughput by 21.3 million tonnes. For comparison, 13.39 million tonnes/year CDU capacities were overhauled for an average of 49 days in 2023, which reduced the throughput by 19.3 million tonnes.

Source: Mysteel OilChem

Another important influencing factor is the crude oil import quotas. Though it is expected that the import quotas will be issued to the approved amount, it is unlikely that there will a first batch issued in advance in December 2023. In other words, the crude oil import quotas enjoyed by independent refineries will be down by 10-15 days compared with 2023.

In addition, some independent refineries are expected to ramp up the imports of alternative feedstock to sustain the production, which will reduce the yield rates of refined oil.

Lastly, it is widely believed that the consumption of refined oil will weaken in 2024, while that of chemicals will pick up. Therefore, the refineries are projected to adjust their production portfolio, and focus more on chemicals.

Meanwhile, three refineries, namely Yulong Refinery, Zhenhai Refinery, and Daxie Refinery, are expected to by put into production in 2024 with a combined capacity of 37 million tonnes/year. But the ramp-up process is likely to be slow.

Taken together, it is estimated that China's gasoline and gasoil production will fall to 172 million tonnes and 230 million tonnes respectively through 2024.

Written by Aggie Hu, huchenying@mysteel.com

Edited by Navy Liu, liuchuanjun@mysteel.com