China slashes June oil refining volumes to six-year low as crude imports collapse

CHINESE oil refiners slashed output in June to the weakest level in six years, as the industry responded to worsening demand and disruptions to crude shipments from the Persian Gulf.

Processing volumes extended their decline in June, dropping 18 per cent year on year to 51.24 million tonnes, the lowest since March 2020 and the first throes of the pandemic, according to the statistics bureau on Wednesday (Jul 15).

It follows a collapse in Chinese crude imports in June to near a decade low.

A slowing economy and the electrification of the transport sector have upended fuel demand and crushed margins, with independent refiners the worst hit given their reliance on cheaper Iranian crude.

The sector, which accounts for as much as a third of Chinese capacity, saw operating rates plunge to a nine-year low, according to consultant JLC.

China’s total refining runs are expected to fall further in July as more firms shelve units for maintenance in order to limit losses, according to GL Consulting, which expects throughput over 2026 to drop 5.6 per cent.

SEE ALSO

China has a powerful new oil price weapon

China learns to live on less fuel, to the relief of oil markets

China lifts fuel export curbs for July, sources say

China’s private refiners snap up Middle East oil as prices slide

More

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

Weaker demand from China, which typically relies on the Middle East for half its crude purchases, has so far helped buffer the global supply shock from the Iran war.

But renewed hostilities in July cloud the outlook for both a recovery in Chinese consumption and the world’s depleted oil reserves. BLOOMBERG