China’s refining activity declined further in June
China’s June crude throughput touched this year’s lowest level and raised concerns about demand growth in the country, capping Brent's price gains, according to market analysts.
PHOTO: Oil pump jacks with the Chinese flag in the background. Getty Images
Chinese refineries processed about 58.32 million mt (14.19 million b/d) of crude in June, down 3.7% from the same period a year ago, market intelligence provider JLC reported citing data from China’s National Bureau of Statistics (NBS).
The recent drop in China's crude throughput can be attributed to higher refinery maintenance work, abundant domestic crude supply and fast development of alternative energy sources, JLC reported.
According to market analysts, this news has exerted downward pressure on oil prices, with the global oil market already becoming more cautious of weak economic growth in China.
“Refinery activity in China slowed further in June,” two analysts from ING Bank said. “Weaker-than-expected Chinese data have weighed on the [oil] complex,” they said.
The country processed about 360.09 million mt of crude (14.44 million b/d) in the first half of this year, down 1.5% from the same period in 2023, data from the NBS showed. "Chinese refiners had a total of about 1.69 million bbl/day [1.69 million b/d] of primary refining capacity offline because of maintenance in June," JLC said.
“The average utilisation rate of independent refineries in Shandong was 52% in June, the lowest since the pandemic first struck the country in 2020,” Price Futures Group’s senior commodity analyst Phil Flynn said.
Crude production in China totaled 17.95 million mt in June, an increase of 2.4% year-on-year, the NBS data showed.
“Given that China is expected to make up the majority of oil demand growth this year, it is not surprising [that] signs of weakness in Chinese demand are a concern,” analysts from ING Bank said.
By Aparupa Mazumder
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