China Cuts Fuel Output and Lifts Aluminum After Gulf Shock
(Bloomberg) -- China processed less crude oil last month, as refiners cut run rates to conserve supplies snarled by war in the Persian Gulf.
Aluminum, another commodity heavily affected by the conflict, saw production rise as smelters took advantage of record margins and the opportunity to plug a global shortfall of the metal.
Refining output fell in March by 2.2% year-on-year to 61.67 million tons, according to the statistics bureau on Thursday, with the decline compounded by the industry’s seasonal maintenance schedules. Aluminum increased 2.7% to 3.85 million tons, close to record levels. Much of the additional metal is likely destined for overseas, to compensate for production losses in the Middle East, which accounts for about 9% of the global total.
The data for March captures the first wave of a supply shock that’s testing China’s vaunted energy resilience, forcing factories to bear higher overheads in power, packaging and shipping costs. Still, China’s economic growth rebounded more than expected in the first quarter, suggesting limited spillover so far from the war in Iran.
Oil-related sectors are feeling the strain. In recent weeks, petrochemicals makers have had to curtail operations because of a lack of feedstock. State oil refiners are tapping into commercial stockpiles, while smaller, independent outfits have been told to maintain fuel production even if it means losing money. Exports of oil products have been curbed.
In addition to its rapid adoption of renewables, Beijing has insisted on raising fossil fuel production in recent years to meet its energy security needs, an effort made all the more pressing by events in the Persian Gulf. The data for March showed continued gains in natural gas and crude oil, and steady coal output.
Among other major commodities, steel output continued to fall as mills adjust to structurally weaker demand. The biggest problem has been the collapse in the property market, but now exports are falling too, with shrinking volumes also linked to the war in the Middle East.
On the Wire
China’s new home price declines abated for a second month in March, a sign that the property downturn may finally be reaching a bottom in some cities.
Shares of Sigenergy Technology Co., a Chinese maker of energy storage equipment, jumped on their Hong Kong debut, a sign of investor demand in an industry swept up in a frenzied rally.
Shares of China’s biggest battery maker surged after it announced plans to expand its footprint in critical minerals and first-quarter net income beat estimates. Contemporary Amperex Technology Co. Ltd. is also pushing for its removal from a Pentagon list of companies tied to China’s military that’s cast a pall over its US prospects.
Gold traders in Hong Kong are commanding higher pay packages, as established global banks compete for talent with new entrants to the city’s growing precious-metals market.
Donald Trump’s bid to block Iran from using the Strait of Hormuz chokes a key Chinese energy supply and risks a showdown with Xi Jinping a month before the two leaders are set to meet in Beijing.
Chinese buyers are coming back to the copper market just as a looming decision on tariffs for the refined metal boosts incentives for more shipments to the US, putting prices on course for fresh records.
This Week’s Diary
(All times Beijing)
Thursday, April 16
- China’s home prices for March, 09:30
- China’s industrial output for March, including steel & aluminum; coal, gas & power generation; and crude oil & refining, 10:00
- Retail sales, fixed assets investment, property investment, residential sales, jobless rate
- 1Q GDP
- 1Q pork output and inventory
- Retail sales, fixed assets investment, property investment, residential sales, jobless rate
- Sigenergy Technology debuts in HK
- Canton fair in Guangzhou (phase 1 through April 19)
- Antaike base metals conference in Hangzhou
- SHPGX natural gas conference in Beijing, day 1
Friday, April 17
- China’s weekly iron ore port stockpiles
- SHFE’s weekly commodities inventory, ~15:30
- SHPGX’s natural gas conference in Beijing, day 2
Saturday, April 18
- China’s 2nd batch of March trade data
- Grains, sugar, cotton, palm oil, pork & beef imports
- Oil products imports & exports breakdown; LNG & pipeline gas imports
- Bauxite, steel and aluminum imports; rare-earth product, alumina and copper exports
(Updates with chart and additional material from fourth paragraph)
©2026 Bloomberg L.P.
