Singapore — China is grappling with overflowing stocks of gasoline on the back of high domestic production, unusually low winter demand and relatively lower availability of export quotas, prompting the country's state-run refiners to cut runs in November. Receive daily email alerts, subscriber notes & personalize your experience. While some refiners are looking for opportunities to ship out cargoes in an effort to reduce stockpiles, others are making efforts to tweak yields in favor of gasoil. "Run rates are likely to stay flat in the near future," a Beijing-based analyst said. This would be an unusual deviation from the norm for the year end when run rates in China typically rise to meet a surge in demand during the winter season. China's social distributor stocks of gasoline in mid-November were up 3.5% from end-October, according to local information provider JLC's survey, which covers 64 social distributors in 21 provinces. Stocks data for state-refiners, which account for 70% of China's refining capacity, are not available. But stocks of oil products -- gasoline and gasoil -- with Shandong independent refineries increased 44% from end-September to a 4-month high of 1.13 million mt by end-October, according to JLC data. Average refinery run rate at state-owned refiners Sinopec, PetroChina, Sinochem and China National Offshore Oil Corporation, inched lower to around 83% of nameplate capacity in November, a monthly survey by S&P Global Platts showed Friday. The combined average run rate in November was down two percentage points from October, but was three percentage points higher from a year ago. China's gasoline production was up by 8.2% year on year in October at 12.4 million mt, compared with 11.46 million mt in the same month a year earlier, while gasoil output was down 7.9% year on year to 14.93 million mt, from 16.21 million mt a year earlier, data from the National Bureau of Statistics showed. Chinese refiners are seeing a build-up of gasoline stocks, as demand had eased after the peak holiday season. "Stocks of gasoline have climbed to slightly higher levels as marketing companies have been taking fewer cargoes from our refinery," a source from Sinopec Luoyang in central China said. Refineries at PetroChina were also grappling with rising gasoline stockpiles. "We have planned to export more gasoline in order to clear the stocks -- also for next month," a source with PetroChina Guangxi said, which has increased its gasoline exports by 300% in November from October levels. In addition to boosting exports, some refiners are planning to trim gasoline yields and raise gasoil yields. China's gasoline demand peaks up seasonally in Q4, bolstered by strong car sales before the year ends, and the uptick in fuel consumption lasts until the Lunar New Year holidays. Its apparent demand for gasoline in 2017 averaged 3.25 million b/d, rising to 3.31 million b/d in Q4 from 3.12 million b/d in Q3, according to analysts. This year, however, China's apparent gasoline demand is likely to drop to 3.4 million b/d in Q4 from 3.5 million b/d in Q3, according to Platts China Oil Analytics. In the first 11 months, refinery runs averaged 81% of capacity at the state-run companies, up from 79% during the same period last year. Sinopec's average run rate fell by four percentage points from October as its Fujian refining complex is currently undergoing a full turnaround. PetroChina's average run rate increased by two percentage points following the restart of its Dalian refinery from partial maintenance. PetroChina's 20.5 million mt/year (410,000 b/d) Dalian Petrochemical refinery has fully resumed operations around November 10 after completing a month-long maintenance at three major units, including a 6 million mt/year crude distillation unit. Sinopec shut its Fujian Refining and Chemical Company refinery on November 1 for a complete turnaround lasting around 47-52 days. Run rates at other refineries under Sinopec and PetroChina have largely remained unchanged in November. At CNOOC, throughput at its 22 million mt/year Huizhou refinery was unchanged at 94% in November, compared with previous month. Sinochem also kept average throughput at its 12 million mt/year Quanzhou refinery unchanged at 108% for the third consecutive month in November. The Platts November survey covered 39 refineries: 20 under Sinopec, 17 under PetroChina, CNOOC's Huizhou refinery and Sinochem's Quanzhou refinery. These refineries, with a combined capacity of 8.73 million b/d, plan to process 7.09 million b/d of crude in November. -- Analysis by Daisy Xu, newsdesk@spglobal.com -- Sambit Mohanty, newsdesk@spglobal.com -- Edited by Elizabeth Thang, newsdesk@spglobal.com
Chinese state-run gasoline refineries cut run rates to 83% of capacity in November in a bid to tackle its oversupply issue. A combination of high domestic production, atypically low winter demand, and too few export opportunities, has led to large gasoline stockpiles, prompting refiners to cut runs at a time when they would usually be increased. The cut represents a 2% rate drop from October and, despite refineries like PetroChina Guangxi raising November's exports by 300% from October levels, producers are still looking to reduce gasoline numbers in favour of raising gasoil yields.