Chinese refinery capacity is going to be surplus

Capacity of energy supply in China is going to be surplus. Significant supply shortages of fuel or electricity were frequently seen during past high demand seasons in the country. It was the adverse effect of the fast growth of economy. Although growth of petroleum demand has been slowing down apparently in a past couple of years, new refining facilities are installed based on the forecast that the demand would continue to increase on the previous pace.

Total crude oil processing capacity in China was estimated at 10.8 million barrels per day as of end-2011. It had increased to 11.5 million bpd a year later. Currently the country seems to have 12.3 million bpd of crude oil processing capacity. Utilization rate of the refineries were nearly 90% in late 2011 and late 2012. But it might have been decreasing to below 80% at moment.

Crude oil processed in November fell 0.6% from a year ago to 9.81 million bpd, according to the National Bureau of Statistics of China. It was the second time year-on-year decrease in this year.

Many organizations are estimating Chinese petroleum demand. But some of those numbers might have been overestimated.

Monthly Chinese petroleum demand figures estimated by the United States Energy Information Administration have exceeded the 10 million bpd level consecutively since April 2012. However, monthly apparent petroleum demand in China calculated by Platts have hovered below the level since March this year.

I am also calculating Chinese petroleum demand with considering a change of stockpile as well. The numbers are even lower than Platts, since stockpile of petroleum products are sometimes significantly risen when crude oil processing is increased.

The level of 10 million bpd seems to be a barrier against the growth of Chinese petroleum demand now. If refining facilities will be added by several percent from the previous year, utilization rate could sink to the middle of 70% level in 2014.