China’s mega private refineries are expected to operate at full processing rates or higher until April as their margins have improved after the government lifted COVID-19 restrictions, company officials said on Wednesday.
The rise in crude demand at Zhejiang Petrochemical (ZPC) and Hengli Petrochemical, which account for 6.5% of China’s refining capacity, will lift crude imports by the world’s top importer, with volumes expected to hit record levels this year and support global prices.
ZPC’s 800,000 barrels per day (bpd) refinery in Zhoushan city increased its run rate to 100% in February, a company official said, adding that run rates should be “no lower than that now”.
Hengli’s 400,000 bpd refinery in the city of Dalian is operating at 107% to 108%, a company official said.
Higher fuel output from them could offset an expected fall in supplies from planned maintenance by state-owned majors in April and May, traders said.
Both ZPC and Hengli are China’s top polyester producers and their plants produce large amounts of paraxylene (PX), a raw material for plastic bottles and synthetic fibre.
The margins for producing PX from naphtha have improved, rising by at least $100 a tonne at the end of March, compared with the end of February, a trading analyst said.
Chinese petrochemical buyers, including ZPC and Hengli, have cut imports recently as they ramp up output, a Singapore-based petrochemicals broker said.
However, new start-up Shenghong Petrochemical is running its 320,000-bpd CDU below full rates because of production issues at its reformer unit, two sources said.
A board secretary official at Shenghong said on Tuesday last week that the company had not suffered any accidents but declined to comment on whether there had been any changes to operation rates.
Among refiners, only ZPC has quotas to export refined products and it is estimated to be exporting 120,000 tonnes of gasoline for April compared with no gasoline exports for March.