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China's refining output set to fall this quarter on thin margins, weak need

Chinese refiners are anticipated to lower fuel output for the rest of the year and keep lower run rates in the very first quarter of 2025 regardless of a. seasonal need uptick, as revenue margins and fuel intake. in road transport stay weak.

The lower refining output in China, which has the world's. largest capacity according to the Statistical Evaluation of World. Energy, is anticipated to cap imports by the world's top crude. purchaser, and might tighten up domestic fuel supply and support costs.

Consultancy Rystad Energy decreased its projection for China's. refining throughput to 14.7 million barrels each day (bpd) for. the fourth quarter from 15 million bpd previously, after some. refiners cut runs amid weak need, stated Ye Lin, its. Beijing-based expert, without calling the refiners.

Vortexa expert Emma Li expects China's refining output to. fall at least 5% year-on-year in the 4th quarter and stay. flat year-on-year at 14.7 million bpd in the very first 3 months. of 2025.

The country's refining output declined year-on-year for a. 6th consecutive month in September as refiners battled with. lower domestic fuel sales and government export quotas.

Month-on-month, throughput fell in April and has held. approximately stable since then.

Demand for transport fuels, which account for about half of. the country's oil usage, has dropped with China's broad. financial slowdown, quick development of electrical automobiles and use of. cheaper liquefied gas replacing diesel as a truck fuel.

Lower throughput is set to slow unrefined imports with. stocks high, Ye stated, forecasting imports at 10.66 million. bpd in the 4th quarter and 10.64 million bpd in the very first. quarter of 2025.

That's below approximately 10.9 million bpd for the. 3rd quarter and 11 million bpd in the very first 9 months,. China's custom-mades data showed.

Citing weak refining margins, Asia's largest refiner Sinopec. recently reported a 52% yearly decline in. third quarter net earnings, while PetroChina tape-recorded a. small drop in oil processing for the very first 9 months.

PetroChina shut a 90,000-bpd crude distillation unit (CDU). at its Dalian refinery in October, part of its strategy to close the. entire plant around mid-2025 and replace it with a smaller. facility at another site, Reuters reported.

Operating rates at independent refiners, called teapots,. in Shandong province moved to 56% at the end of October, a study. of 40 teapots by regional information supplier JLC showed.

For the first 3 quarters, running rates for Shandong. teapots averaged 57%, down 9 percentage points from the very same. period a year earlier, JLC said, as earnings for processing. imported unrefined plunged 82% to 98 yuan ($ 13.76) per metric heap.

Teapots are expected to preserve low operating rates due to. poor margins and government caps on their unrefined imports, JLC. stated in the survey.

Refiners are also under pressure from weak petrochemical. margins brought on by oversupply.

(source: Reuters)