China's newest refiner Shandong Yulong Petrochemical is operating its newly started 200,000 barrel per day (bpd) crude unit at around 90% and aims to start trial runs at a second unit of the same size in January, trade sources said.
The start of full operations at the $20 billion complex would help lift China's crude imports and its output of refined products in 2025, offsetting some of the falls this year due to waning Chinese fuel consumption and thin refining profits.
The refinery, located on a man-made island in Longkou county of the city of Yantai, is the latest of the four large refinery-chemical complexes that China has added since 2018 as Beijing promotes bigger and stronger manufacturers.
The others are Zhejiang Petrochemical Corp, Hengli Petrochemical and Shenghong Petrochemical.
Yulong Petrochemical is currently processing approximately 25,000 metric tons a day, or 182,500 bpd, of crude at its No. 2 crude distillation unit (CDU), three sources with knowledge of the plant's operation said. This is up from an operating rate of 60-70% in late September.
Yulong Petrochemical, which did not immediately respond to a request for comment, is aiming to start trial runs at the No.1 crude facility towards the end of the year or in January, the three sources told Reuters.
At the same time, Yulong is also expected to start up a 1.5 million ton-per-year (tpy) ethylene unit, one of the largest of its kind and one of the two units at the site, one source added.
For other petrochemical units, Yulong is still waiting for an operational licence to start up its paraxylene (PX) facility, a key feedstock for polyester fibres, two other sources said. Yulong boasts 3 million tpy PX capacity.
Yulong Petrochemical is 51% owned by private aluminium smelter Nanshan Group while provincial government-backed Shandong Energy Group has a 46.1% stake. The remainder is held by two local companies.
(metric ton = 7.3 barrels for crude oil conversion)
