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China July crude throughput climbs on-year, but off record as glut weighs

China’s July crude oil throughput rose 4% from a year earlier, official data showed on Wednesday, buoyed by improved refinery profit-margins and as new plants started production.

Refinery runs reached 52.6 million tonnes last month, or about 12.39 million barrels per day (bpd), according to figures from the National Bureau of Statistics (NBS).

However, that was down over 5% from June’s record of 13.07 million bpd, amid mounting supplies from more efficient, giant producers.

“Profit-margins at refineries are following an upbeat trend, largely supported by strong demand for diesel amid robust industrial operations,” Jin Xiao, senior analyst at Orient Futures, said ahead of the data release.

Average refining losses on processing crude oil have largely narrowed to a break-even level, with some plants with production lines more geared towards chemicals turning a profit.

But Jin added that this recovery in profits could be temporary as China’s oil refining industry still has ample overcapacity and plentiful supply of refined oil products.

Newly launched private firm Hengli Petrochemicial is running at full refining capacity of 400,000 bpd, while Zhejiang Petrochemical is expected to reach full operations during the third-quarter.

Elsewhere, Hengyi Petrochemical has started trial operations at its new refinery and petrochemical facilities in Brunei, the fourth refinery to commence production in Asia this year.

“China’s refined oil exports mainly flow to Southeast Asia. The launch of this new refinery will elbow out Chinese refined products and exacerbate the oil glut, which will further cut profit-margins at refineries,” said Jin.

For the first seven months of 2019, Chinese crude throughput rose 5.6% from a year earlier to 369.73 million tonnes, or 12.73 million bpd, the NBS reported.

The NBS data also showed China’s crude oil production in July rose 2.5% on-year to 16.29 million tonnes, or about 3.84 bpd. That compares to 3.92 million bpd in June.

Output in the January to July period increased 1% from a year earlier to 111.31 million tonnes, or about 3.83 million bpd.

Natural gas output reached 13.9 billion cubic metres (bcm) in July, 6.1% higher than a year earlier, according to the data.

In the January-July period, China churned out 100.3 bcm of gas, up 9.7% on-year.

Natural gas output growth once again outpaced crude oil as state-backed companies boosted production to meet increasing demand amid Beijing’s push to replace coal with clean energy.

Source: Reuters (Reporting by Muyu Xu in BEIJING and Chen Aizhu in SINGAPORE; Editing by Tom Hogue and Joseph Radford)

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