China’s oil refining output declines amid seasonal maintenance, economic concerns

China’s oil refining output declined in May compared to the same month last year, influenced by reduced refining margins and planned seasonal maintenance, according to official data released on Monday.

Chinese refiners processed 14.25 million barrels per day (bpd) in May, marking a 1.8% year-over-year decrease, as reported by the National Bureau of Statistics (NBS) and converted into barrels by Reuters. This figure was also lower than the 14.6 million bpd recorded in May 2023 and the 14.3 million bpd in April 2024.

From January to May, China’s average refinery throughput was 14.49 million bpd, showing a modest increase of 0.3% compared to the same period last year. However, this slight uptick doesn’t offset concerns about weakening oil demand in China, the world’s largest crude importer, amidst a persistent property crisis and mixed economic signals.

In 2023, China’s total refining output reached a record 14.76 million bpd. This year, due to the real estate slump, output may stagnate or even decline, according to a Bloomberg survey of six market consultants and analysts. This potential decline would be the first since 2004.

Refinery runs in China were particularly low in April and May due to seasonal maintenance at major state and privately-held refineries. The International Energy Agency (IEA) reported a significant drop in Chinese crude oil imports in May, suggesting continued subdued refining activity.

“Chinese refinery runs slumped to Covid-era levels in April and an 8.7% year-over-year decline in Chinese crude oil imports in May suggest subdued runs again last month,” the IEA noted in its latest monthly report.

The IEA also highlighted weakened refining margins in Asia and the United States, which fell to three-year lows in May. Singapore’s margins are nearing, if not already at, the threshold for production cuts, with gasoline margins particularly affected.

Market analysts will closely monitor Chinese refining output from June onward, after the seasonal maintenance period ends, to gauge future trends in China’s run rates and overall oil demand.