China's oil refining slows down as fuel demand weakens

Chinaʼs oil refining industry is going through a rough patch. The countrys refineries processed 14.29 million barrels per day (bpd) of crude oil in 09/2024 which is 5.4% less than the same time last year. This marks the sixth month in a row where output has gone down.

The main reasons for this drop are weak fuel demand and low profits from refining. Even though some refineries came back online after maintenance and a new one started up the overall trend is still downwards.

Theres some confusion about the exact numbers. The National Bureau of Statistics (NBS) data shows a smaller decline than what Reuters calculated. The NBS might have changed last years figures‚ but they didnt give a clear explanation why.

Chinaʼs economy isnt doing great‚ and this is affecting fuel use. Diesel consumption has gone down because of the slowdown. Whats more‚ trucks are starting to use liquefied natural gas (LNG) instead of diesel because its cheaper.

A new player‚ Shandong Yulong Petrochemical‚ joined the game in late 09/2024. This might help boost refinery output in the coming months as they ramp up production. However smaller refineries in Shandong were only running at 53.5% capacity in late 09/2024‚ which is way less than last year.

Looking at the bigger picture from 01/2024 to 09/2024‚ refinery output was down 1.6% compared to the same period last year. This is the fourth time in a row that year-to-date volumes have dropped.

On a brighter note‚ Chinaʼs own crude oil production went up a bit‚ and natural gas production increased by 6.8% in 09/2024 compared to last year. The country produced 19.3 billion cubic meters of natural gas that month