Chinese Oil Refiners Slash Output After Crude Imports Plunge
(Bloomberg) -- Plunging crude imports forced Chinese oil processors to sharply reduce output last month, with runs in the state-owned sector dropping to multiyear lows.
Refiners are feeling the pinch after the near-halt to shipments through the Strait of Hormuz choked a vital channel for crude. The country processed 54.65 million tons of oil in April, 11% less than March and 5.8% lower than the previous year, the statistics bureau said on Monday.
State firms cut run rates to below 67% of capacity, a record low in Mysteel Oilchem data going back to 2021, to maintain profitability. The contribution from smaller, privately owned plants stemmed the overall decline after the government told them to keep production at 2025 levels at all costs to stabilize the supply of fuels like gasoline and diesel.
Higher crude costs and tepid fuel consumption are likely to keep margins and runs under pressure in May, as well. Although China remains the world’s biggest importer, the rapid electrification of its transport sector is weakening oil’s grip on the economy.
On the power side of China’s energy mix, utility-scale electricity generation rose 2.6% year-on-year, due to hotter weather and export-led strength in the factory sector, although the gain lagged the broader 4.1% increase in industrial production.
The price of coal, China’s mainstay power fuel, has also climbed in recent weeks as domestic conditions tighten and the market responds to disruptions to international gas supplies. Chinese production, however, fell 1% in April after seasonal maintenance affected mines. Other fossil fuel output rose as the country continues to build resilience in oil and gas.
Among metals, aluminum output increased 3.1% to 3.87 million tons, a record on a daily basis, as smelters took advantage of elevated margins and the opportunity to plug a global shortfall of the metal caused by the Iran war. Steel output, more heavily affected by the ongoing property crisis, fell 2.8%.
On the Wire
China’s economy slowed across the board in April with investment resuming declines while retail sales and industrial output fell short of forecasts, underscoring the economy’s vulnerability in the face of a global energy crisis. New home price declines abated for a third month, reinforcing hopes that the multiyear property downturn may finally be nearing a bottom.
Australia’s government has ordered the biggest shareholders in rare earths firm Northern Minerals Ltd. to sell their stakes, the second such intervention in two years as Canberra seeks to protect the company from China-linked investors on national security grounds.
China has agreed to purchase at least $17 billion of agricultural products from the US annually through 2028, the White House said in a fact sheet detailing President Donald Trump’s two-day summit in China. Grain futures in Chicago jumped.
China signaled that Australian beef imports are nearing a key safeguard threshold, with shipments reaching 80% of an annual quota that caps imports at current tariff rates.
China’s large-scale data centers have joined electricity spot trading as virtual power plants for the first time, marking a shift in how computing demand interacts with the grid.
This Week’s Diary
(All times Beijing)
Monday, May 18
- China home prices, 09:30
- China’s industrial output for April, including steel & aluminum; coal, gas & power generation; and crude oil & refining, 10:00
- Retail sales, fixed assets investment, property investment, residential sales, jobless rate
- China’s 2nd batch of April 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
- Clean-tech exports including EVs, batteries and solar
- Tongwei earnings webcast at 15:00
Tuesday, May 19
- Russian President Vladimir Putin visits China
- China Energy Week in Beijing, day 1
Wednesday, May 20
- Russian President Vladimir Putin visits China
- China sets monthly Loan Prime Rates, 09:00
- China’s April output data for base metals and oil products
- China’s 3rd batch of April trade data, including country breakdowns for energy and commodities
- CCTD’s weekly online briefing on coal markets, 15:00
- China Green Aluminum Summit in Shanghai, day 1
- China Energy Week in Beijing, day 2
Thursday, May 21
- China Green Aluminum Summit in Shanghai, day 2
- China Energy Week in Beijing, day 3
Friday, May 22
- China’s weekly iron ore port stockpiles
- SHFE’s weekly commodities inventory, ~15:30
- China Energy Week in Beijing, day 4
(Updates with other data from fifth paragraph)
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