China’s crude oil refining activity surged in June, reaching the highest monthly throughput since late 2023. Refineries processed approximately 15.15 million barrels per day (bpd), representing an 8.5% year-on-year increase.
Key Highlights:
- Record Output: The June figures mark a major rebound in refining, with state-owned refineries leading the charge.
- High Utilization: State-controlled plants operated at nearly 80% capacity, while smaller independent “teapot” refineries remained at lower rates, around 40–50%.
- Strong Margins: Refining profits rose significantly, supported by favorable crude economics and resilient fuel pricing.
Drivers Behind the Surge:
- Post-Maintenance Rebound: Major state refineries returned to full operation following spring maintenance closures, boosting output and replenishing low gasoline and diesel reserves.
- Seasonal Demand: Rising summer travel spurred increased demand for transport fuels, contributing to the production surge.
- Strategic Stockpiling: State refiners also increased crude inventories to support both domestic fuel needs and export opportunities.
Outlook and Implications:
- Impact on Oil Prices: Increased Chinese demand is expected to support higher global oil prices, particularly during the peak travel season.
- Independent Refinery Struggles: Smaller refiners continue to face pressure from narrow profit margins and higher feedstock costs, limiting their contribution to overall output.
- Sustained Momentum Expected: Analysts forecast continued high output levels through the third quarter, with state refineries potentially reaching even higher utilization rates as demand remains stable.
China’s refining boom highlights its growing influence on global oil markets and reflects both strategic planning and seasonal consumption dynamics.
