China Petroleum & Chemical Corp., Asia's biggest oil refiner, will reduce crude processing by 10 percent in November from July's record as the nation's economic slowdown cuts fuel demand
China Petroleum & Chemical Corp, Asia's biggest oil refiner, will reduce crude processing by 10 percent in November from July's record as the nation's economic slowdown cuts fuel demand, company officials said.
The state-owned refinery, which supplies more than half of China's fuel, will process about 15 million metric tons a month, or 3.65 million barrels a day, starting November, said three officials, who declined to be named because of internal rules.
Sinopec, as China Petroleum is known, isn't ruling out further cuts, the officials said.
Sinopec is lowering output even as refining margins improve because of a drop in oil prices. China's fuel demand has fallen as manufacturers shut plants and airlines ground planes after the world's fourth-largest economy grew at the slowest pace since 2003 in the third quarter.
Petrochemical stockpiles, including naphtha, a raw material for plastics, are at records.
"The throughput cut is consistent with the current market situation in China in the face of declining fuel demand,'' said Victor Shum, senior principal at consultant Purvin & Gertz Inc. in Singapore. "Ten percent is a significant number and the news will certainly put further downward pressure on global oil prices.''
Benchmark oil prices in New York have fallen about 60 percent from July's record of $147.27 a barrel. Crude oil for December delivery fell as much as 44 cents, or 0.8 percent, to $57.8 a barrel and was at $57.97 at 3:40 p.m. Singapore time. The contract earlier rose as much as 3 percent.
The nation's processing volume, including those at rival PetroChina Co. and privately owned plants, reached a record 30.3 million tons in July and fell to 29.8 million in October, according to customs data.
The International Energy Agency, the adviser to 28 oil- consuming nations, yesterday lowered its forecast for fuel demand in China, the world's second-largest energy user, by 200,000 barrels a day.
Huang Wensheng, Sinopec's Beijing-based spokesman, wasn't immediately available to comment when contacted by phone.
Sinopec is monitoring the market and further cuts may be necessary if demand worsens, the officials said. China cut diesel and gasoline imports to the lowest in seven months in September after domestic demand shrank, customs figures showed on Oct. 17.
Sinopec will operate its Hainan refinery at 70 percent to 80 percent of the designed capacity this month because of high fuel stockpiles, one of the officials said. The 8 million ton- a-year plant in the southern island province operated at its full capacity of 700,000 tons a month during summer, he said.
Sinopec Yangtze Petrochemical Ltd. plans to reduce crude runs to 620,000 tons in November from 700,000 tons in October, said an official at the plant in the eastern city of Nanjing. The refinery is able to process 8 millions tons of crude a year.
Sinopec Maoming Petrochemical Corp., Beijing-based Sinopec's second-largest refinery, will slash oil processing by 8.3 percent to 1.1 million tons this month, from 1.2 million tons in July and August, the plant's spokesman, Cai Zhan, said yesterday.
The plant in the southern city of Maoming in Guangdong province, China's largest energy consuming market, is designed to process 13.5 million tons of oil a year.
China said earlier this week that it will spend at least 188.5 billion yuan to build six energy projects starting this year as part of the government's 4 trillion yuan stimulus plan to spur economic expansion.
China's power production fell 4 percent to 264.5 billion kilowatt hours in October, the first decline since March 2005, the National Bureau of Statistics said yesterday.