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China likely to see gasoil supply shortage on stronger demand, refinery maintenance in Sep-Oct

https://www.chemnet.com   Sep 15,2011
China is likely to see a shortfall in gasoil supply in September and October, as demand is growing and major refineries still run at relatively low rates on average because of maintenance.

Gasoil demand from end-users is normally strong in September and October, and most traders have showed booming demand recently amid bullish market sentiment, after keeping stockpiles low in August.

In addition, the drought in parts of Southwest China may spur demand around autumn harvest.

Major refineries are expected to run at low rates on average in September and October, as they are scheduled to have altogether about 42-mil mt of annual refining capacity under maintenance in the two months, C1 found. Most of the maintenance will take place in PetroChina’s refineries in Northwest China and Northeast China. Sinopec will also have some refineries under maintenance, including Luoyang Petrochemical in North China and Jiujiang Petrochemical in Central China.

As a result, major refineries' average run rate is likely to hover at around 80% in September and October, still quite low for this year. Their daily crude throughput in September and October is expected to drop by 6-7% from this year's peak in May.

Meanwhile, Shandong independent refineries will probably run at low capacity, because of poor refining margins. These refineries’ operation rates averaged 35.8% on Sep 8, C1 found.

Furthermore, relatively little new refining capacity has been scheduled to come online this year. Only about 12.9-mil mt of refining capacity is expected to come on stream in 2011, mostly at the end of the year.
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