China's refined oil production is expected to jump year on year in the second quarter of 2024, in the face of less extensive overhaul of state-owned refineries and resilient demand, per OilChem historical data.
According to OilChem survey, the CDU capacity to be overhauled by state-owned refineries, whose combined CDU capacity took up approximately 60% of the total, will be down 23.46% over April-June 2024 compared with 2023. In other words, the production loss is expected to be less significant year on year during the traditional maintenance season.
Source: Mysteel OilChem
More importantly, the refined oil consumption is expected to remain resilient.
For gasoline, the traveling needs are projected to support the gasoline production as there will be three public holidays in the second quarter. And domestic commercial gasoline inventory has been at the multi-year low of 11.72 million tonnes as of March 7, down 16.77% YoY. But it is worth noting that the gasoline consumption will be partly superseded by electric vehicles.
Source: Mysteel OilChem
Regarding gasoil, though the outdoor construction and mining projects in North China will gradually resume normal operation, the rainy season in the south will be a bearish factor. Meanwhile, the gasoil inventory was relatively high at 17.37 million tonnes as of March 7, an annual growth of 5.6%. Nevertheless, the gasoil export profits have been constantly high recently, which will potentially encourage the state-owned refineries to ramp up the exports.
Source: Mysteel OilChem
Taken together, China's refined oil production will gain certain support from the recovering demand, as well as less extensive maintenance of state-owned refineries in the second quarter of 2024.
China's CDU capacity totaled around 983 million tonnes/year as of end-2023, of which around 585 million tonnes/year were held by state-owned refineries.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com
