SOME of China’s top refineries will shut down in May and June for maintenance, cutting nationwide throughput by some 10 percent and dampening oil demand in the world’s largest crude importer after record run levels in March, according to a recent survey.

At least six State-owned and private refiners are planning a full annual maintenance shutdown in the second quarter of the year for 30 days or more, including China’s largest refiner Sinopec’s Zhenhai unit, the survey of 11 plants showed.

A slowdown in China’s refining activity could result in lower Chinese imports of crude oil, which in turn could undercut a two-month price rally that has lifted crude to more than US$75 a barrel for the first time in over three years.

Analysts and traders say imports may also be disrupted by a shutdown of major oil import hub Huangdao, part of Qingdao port in Shandong Province, further crimping consumption.

“If Shandong prepares to shut down the Huangdao Port, crude arrivals could start dropping starting in late May,” said Emma Li, senior analyst at Thomson Reuters Oil Research.

In total, the six plants to be fully shutdown process around 1.09 million barrels per day (bpd), accounting for 10 percent of China’s average monthly crude runs, media calculations based on refinery rates from China’s statistics bureau showed.

The pace of outages due to maintenance is down from 1.26 million bpd in the same period last year, media calculations also showed.

But the actual volume of outages could grow as a flurry of independent refineries are considering undertaking maintenance in June and early July to avoid the potential pollution curbs.

The early start could prolong China’s annual maintenance season. Independent refiners, often known as teapots, typically carry out their routine repairs later in the summer.

“Usually the maintenance period falls in July and August, but this year we are planning one in June,” a crude purchasing manager with a Shandong-based refiner said.

The outages and potential slowdown in demand will likely put brakes on China’s appetite for crude oil as refineries have been churning out fuel at a record pace to take advantage of bumper profit margins.

Trade data in Thomson Reuters Eikon shows China will likely take in more than 9 million bpd of crude in April, its most ever.

Some of those arrivals are spillovers from March due to a backlog at Qingdao, Li said, and some private refiners might have already bought more to prepare for any disruption at the port.

Crude arrivals in May 2017 fell more than 4 percent from April last year due to Chinese refiners’ maintenance plans.

Further denting forward crude demand is that many of the teapot refiners, including Tianhong Chemical and Haiyou, will undertake maintenance this year.

Shandong Haike Group will also close for the whole of June, an official at the plant said.

(SD-Agencies)