China's refinery crude throughput over January and February dipped 1% year on year to 78.78 million mt, or an average of 9.79 million b/d, according to preliminary data from the country's National Bureau of Statistics released Thursday.
The 1% contraction compares with a 3% year-on-year increase over the corresponding months of 2013.
The bureau did not reveal refinery throughput data for the individual months. It typically combines preliminary output data for January and February because of the Lunar New Year holiday, which was celebrated in China this year over January 31-February 6.
The last contraction in China's refinery runs occurred in November 2013, when they fell 0.6% year on year to 9.81 million b/d.
In contrast, China's total crude imports over January-February this year rose a hefty 11.5% year on year to 51.2 million mt, or 6.36 million b/d, according to preliminary data from China's General Administration of Customs released Saturday.
REFINING OVERCAPACITY
The latest data comes amid increased warnings that China's refining sector is facing serious overcapacity because of stagnant demand growth and prior aggressive expansions.
Platts surveys of some of China's largest state-owned refineries in January and February showed that they had planned to run at an average 81% of total capacity in January and 84% in February.
Market sources attributed the higher run rate last month to ample crude supply and a lack of planned maintenance at refineries.
The survey in January covered 24 refineries, comprising 13 from Sinopec, 10 from PetroChina as well as China National Offshore Oil Corp.'s Huizhou refinery. The 22 refineries that were polled last month comprised Huizhou, the same 10 PetroChina refineries from January, as well as 11 Sinopec refineries.
Both surveys did not take into account China's two new refineries -- PetroChina's 200,000 b/d Pengzhou plant and Sinochem's 240,000 b/d Quanzhou refinery -- that started trial operations in January.
The average run rates so far this year have slipped from a year ago, when they were surveyed by Platts at 85% in both January and February 2013.
Due to weak domestic demand, Chinese refiners last year exported 2.78 million mt of gasoil, 50.3% more compared with 2012 even though domestic production was up just 0.3% year on year to 172.73 million mt.
In a report on Wednesday, Beijing-based energy consultancy 3E said that while there is a lot of expectation for higher oil product outflows from China this year, as the country copes with weakening oil demand growth, export growth is not in line with "state refiners' strategies or [the] central government's policy guidelines".
Instead, domestic refiners are more likely to cut their plant runs to alleviate the pressures of an oversupplied domestic market, the report said.
The oversupply in the market has also resulted in lower oil product imports this year, with incoming shipments sliding 15.3% year on year to 6.18 million mt over January-February, according to Chinese customs data.
As such, China's net oil product imports over January-February this year plunged 28.5% year on year to 1.91 million mt, taking into account a 7.8% fall in the country's oil product exports to 4.63 million mt.
