China Refinery Throughput Plunges to Six-Year Low on Weak Demand
Chinese refiners slashed processing to pandemic-era lows in June as a decade-low in crude imports and weak domestic demand forced widespread plant maintenance, signaling severe stress in Asian oil markets.
Chinese refinery throughput plummeted to its lowest level since the onset of the Covid-19 pandemic in June, dropping 17.7% year-on-year to just 12.47 million barrels per day. National Bureau of Statistics data published on Wednesday showed total processed volumes for the month fell to 51.24 million tons, down from 53.72 million tons in May.
The dramatic drop in processing was directly precipitated by a collapse in crude oil imports. Official customs data released on Tuesday revealed that inbound shipments plunged by 41.3% compared to June of last year, falling to 29.27 million tons. At an equivalent of 7.12 million bpd, this marks a decade low for Chinese crude purchases, a level not seen since October 2016.
Disrupted maritime flows through the Strait of Hormuz have tightened global supply and driven up input costs for Asian buyers. Rather than pass these elevated crude prices onto a sluggish domestic market, Chinese refiners have chosen to idle capacity. By increasing maintenance schedules, plants are actively curtailing losses from squeezed refining margins.
The resulting utilization figures underscore the severity of the demand destruction. Consultancy estimates indicate the average refinery run rate fell to 57.72% in June, a steep 3.28 percentage point decline from the 66.3% rate recorded in May. For market participants, a sub-60% run rate in the world's largest oil importing nation serves as a stark indicator of how elevated geopolitical risk premiums are suppressing physical demand.
This structural retreat from the market is expected to persist into July. Consultancy estimates forecast continued declines in Chinese throughput as refiners maintain high maintenance rates in response to weak domestic fuel consumption and restricted Middle Eastern supply. The prolonged scaling back of Chinese refining operations removes a crucial demand anchor for global crude markets, leaving international benchmark prices highly vulnerable to further swings in Middle Eastern shipping disruptions.
