Sinopec to Increase Refining Output by 100,000 Bpd in February
China’s state-owned energy giant, Sinopec, is set to boost its refinery run rates by 100,000 to 150,000 barrels per day (bpd) in February to meet rising fuel demand during the Lunar New Year holiday travel surge, according to a Reuters report citing trading sources.
The planned increase represents 2% to 3% of Sinopec’s average daily processing capacity for 2024, which stands at just over 5 million bpd, Reuters noted.
Strategic Refinery Adjustments Ahead of Maintenance
In addition to responding to heightened seasonal demand, Sinopec aims to build up inventories ahead of planned refinery maintenance in the spring. Trading sources indicate that 700,000 bpd of Sinopec’s refining capacity will be taken offline between mid-March and the end of May for scheduled maintenance.
Independent Refiners Reduce Run Rates
While Sinopec ramps up production, China’s independent refiners, known as “teapots,” are scaling back operations due to higher crude costs. These refiners rely heavily on oil imports from countries facing U.S. sanctions, leading to increased costs. Some independent refiners have cut processing rates to between 50% and 55%, marking the lowest utilization levels since mid-2023, Reuters reported, citing traders and consultants.
Declining Refining Output Amid Economic Uncertainty
Sinopec, China’s largest refiner, reported earlier this month that its total crude throughput fell by over 2% in 2023, reaching 252.3 million tons—the first decline in decades. The drop reflects broader challenges in China’s refining sector, which has been impacted by sluggish oil demand and cautious crude imports amid concerns over economic growth and reduced fuel consumption.
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Despite these concerns, China’s economy grew by 5% in 2023, aligning with official targets. However, data from the National Bureau of Statistics shows that Chinese refiners processed an average of 14.13 million bpd of crude oil in 2023, marking a 1.6% decline from the record 14.7 million bpd processed in 2022 when China emerged from pandemic lockdowns.
Source: Oilprice.com
