After a slow start to the pandemic by 2020, Chinese refineries have increased production since April, thanks to ultra-low crude oil prices and the recovery of the Chinese economy and fuel demand, setting a new record for crude oil processing volumes.
Crude oil production at China’s refineries averaged 674.41 million tons, or 13.51 million barrels per day (bpd), in 2020, an increase of 3.2% over the previous year, to a record volume processing, according to the National Bureau of Statistics cited by Argus.
Last year, when international crude oil prices plunged in March, April and most of May, Chinese refineries took advantage of the lowest prices in recent years and stocked up on crude oil at low prices. For several months, China crushed oil imports records until the summer, and oil companies had to wait weeks to unload crude oil as port congestion increased.
Several new refining units also contributed to China’s record crude oil processing rates in 2020, as did higher government import quotas for so-called independent refineries – so-called teapots.
According to data from China’s statistics bureau quoted by Argus, Chinese refineries reduced crude oil production between January and March, with March production down 6.6 percent year-on-year. However, in April, refineries began to intensify crude oil processing, which reached a daily record in November – at 14.2 million bpd, up 3.2% from November 2019. The average refining capacity in December was only slightly lower – at 14.18 million bpd, it remained close to record levels in November, according to Argus estimates.
China’s crude oil imports also rose to a record high of 10.85 million bpd on average in 2020, up 7.3 percent due to low crude oil prices and the establishment of more refineries.
For most of last year, strong demand from China alone supported the oil market, while demand from Europe and the United States declined with the resurgence of COVID-19 cases.
By Tsvetana Paraskova for Oilprice.com
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