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China's crude oil stocks fall for first time in a year

Singapore (Platts)--16 Nov 2017 1005 pm EST/305 GMT


China's crude oil stocks fell for the first time in 12 months in October -- by 27.41 million barrels from the month before -- as crude imports hit a one-year low amid strong throughput at domestic refineries, S&P Global Platts calculations based on latest official data showed Thursday.

The last time China saw a draw in monthly crude stocks was October 2016, of 18.32 million barrels.

Stocks subsequently rose each month until a 20.16 million-barrel build was calculated for September.

Analysts said the country was unlikely to see a significant crude stock build in November amid expectations refinery throughput will remain high in the month.

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China does not release official data on stocks.

Platts calculates China's net crude stocks build or draw by subtracting the official refinery throughput data from the country's crude supply data.

The latter takes into account net crude imports and domestic crude production.

Latest data from the National Bureau of Statistics showed that refinery throughput in October jumped 7.4% year on year to 11.94 million b/d, despite edging down 0.9% from the historical high of 12.06 million b/d in September.

"The October run was slightly lower than that in September only because of the 19th China's Communist Party Congress, which required industrial plants to lower runs to cap pollution," said a Beijing-based analyst.

Meanwhile, China's crude imports in October hit a 12-month low at 7.34 million b/d, resulting in country's crude supplies in the month falling 13.1% from September to 11.06 million b/d, despite posting a 4.5% rise on a year-on-year basis.

As a result, refiners needed to draw down around 884,000 b/d of crude from inventories to feed their units.

China's crude stocks over January-October increased 267 million barrels. The increment was 20.4% higher than in the same period of 2016.

This has already outpaced the 269 million-barrel increase seen over full year 2016, which exceeded the 153 million-barrel build seen in 2015.


THROUGHPUT SEEN TO RISE IN NOV


China's crude inventory was unlikely to see significant growth in November as both state-owned and independent refiners were expected to boost throughput even higher than in October due to good refining margins.

"We expect both the state-owned and independent refineries will lift their throughput in November to enjoy good margins," said the Beijing-based analyst.

The domestic prices of gasoline and gasoil were currently rising amid expectations the government will lift the guidance prices by around Yuan 260/mt or $4.61/b for gasoline and $5.26/b for gasoil later Thursday.

Independent refineries in Shandong province lifted their average run rate to 67.6% over the week to Wednesday from the 63.3% over the same week in October, according to an analyst with domestic information provider JCL.

Meanwhile, state-owned Sinochem's Quanzhou refinery has delayed its scheduled maintenance start date from November 1 to December 3, while Sinopec Hainan refinery's maintenance has been delayed to November 18 from November 8, market sources said. The delays would also support runs.

"Crude imports in November will rise from October too, but the increment may be just for meeting throughput demand instead of for storage, amid backwardation in the pricing structure," said senior analyst Wang Zhuwei with S&P Global Platts China Oil Analytics.

Wang expected China's crude imports would rebound to around 8.5 million mt in November, slightly higher than average of 8.42 million b/d seen over January-October.

The front-month Dubai crude price has been mostly higher than the second-month price since September, with the continuing backwardation indicating the prompt market remained bullish.

-- Oceana Zhou, oceana.zhou@spglobal.com
-- Edited by Wendy Wells, newsdesk@spglobal.com




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