China’s refineries processed a record amount of crude oil last month, at 14.8 million bpd, up by 3.9% from May when run rates also broke records, Reuters reported, citing data from the national statistics bureau. The average daily run rates for the first half of the year were even higher, at 15.13 million barrels—up by 10.7% from a year earlier, the data also showed.
Refinery runs globally surged by as much as 1.6 million barrels per day in June, up from a stagnant performance in May, the International Energy Agency said in its Oil Market Report for July published earlier this week.
After the June jump, which was the largest monthly increase since July 2020 as per Reuters estimates, refinery runs are expected to further jump through July and August. The increase over this month and next is expected at another 2.7 million bpd from June levels, the IEA said. China certainly accounted for a lot of that increase, but in the second half of the year, things may well change. A lot of the increase during the first half came from independent refiners, the so-called teapots, which just saw their second batch of import quotas reduced by Beijing as excess fuel supply has started eating into refiners’ margins and as the government tightens its grip on the independent refining industry.
According to FGE analysts, as cited by Reuters, run rates at independent refineries could decline by close to half a million barrels daily in the current quarter because of the quota cuts and a crackdown on quota trading between state oil majors and teapots.
Meanwhile, crude oil imports have been on the decline in the first half of the year, according to the latest customs data. It’s worth noting, however, that the decline was from unusually high import rates last year amid low oil prices that China used to fill up its inventories.