COVID-19, first hit Wuhan in Hubei province in central China in December, impacting demand in Asia's biggest oil demand center. It has since led to lockdowns in India, Malaysia, Thailand and Pakistan, forcing regional refiners to cut runs and in some cases to declare force majeures for crude imports.

But there are some signs of oil demand recovery in China, where state-owned refining giants have increased run rates. "China's domestic demand has been recovering since March as industry production and domestic transportation resume when COVID-19 spread is controlled," a senior executive with PetroChina said.

S&P Global Platts Analytics expects global oil demand to contract by 4.5 million b/d in 2020. This compares with a growth of 1.3 million b/d projected at the start of the year, as COVID-19 causes grounds flights and locks people in their homes.

Asia's oil demand is expected to contract by 3 million b/d in the first of 2020, before rebounding to grow by 1 million b/d in H2 2020, and refinery runs in Asia feel by 2.7 million b/d in the first quarter of 2020 and are expected to fall further in Q2 as storage space runs out, according to Platts Analytics.

Infrastructure

China

**China's state-owned oil refining giants have raised their refinery utilization rates to around 70% of their combined nameplate capacity in March from a record low 67% in February on signs of oil demand recovery in the developed southern and coastal regions where the spread of coronavirus was under control, according to a Platts survey.

**Sinopec, the world's largest refiner by capacity, raised its run rates to 72% in March from a historical low of 64% in February and will further increase throughput in April, the survey showed. Maoming Petrochemical in Guangdong province lifted its run rate to 103% in March from 86% in February, becoming one of the Sinopec refineries fully to return to normal.

**PetroChina's refineries, most of which are in northern China and inland, cut their average throughput plan to 64% of capacity in March from 66% in February and 78% in January. PetroChina's export refinery Guangxi Petrochemical remained shut despite finishing its 50-day scheduled maintenance period in end-March on high crude inventories.

**Independent refineries in eastern Shandong province also lifted their run rates to an average of 52.1% over March 1-25 from 41.5% in February, according to local information provider JLC.

India

**State-run Indian Oil Corp. has cut throughput at most of its refineries by 25%-30%, although it has tweaked the product slate to meet the rise in LPG demand because of increased cooking during the lockdown period.

**India's No. 2 refiner Bharat Petroleum Corp. has reduced crude throughput by 30% at its Mumbai refinery, according to a source close to the company. The cut took effect on March 29, and was expected to last at least a week.

**India's No. 3 refiner Hindustan Petroleum Corp. Ltd. has cut its throughput by a tenth at its Mumbai refinery, while the Vizag refinery is operating at its normal run rate, according to market sources.

Japan

**Some Japanese refiners are considering cutting operating rates further in April -- despite the rate in March falling to the typical turnaround level before the maintenance season has started -- on plummeting global demand.

**At least two Japanese refiners are looking at the potential need for run cuts in April due to a drop in domestic demand for key oil products such as gasoline and gasoil, coupled with country's relatively light spring refinery maintenance season this year.

**Japan's crude throughput dipped 0.2% week on week to 2.81 million b/d over March 22-28, according to the Petroleum Association of Japan data. It was last lower 23 weeks ago at 2.68 million b/d during October 13-19 during the autumn refinery turnaround season.

*In April, Japan's refinery outage will total up to 497,000 b/d or 14% of its installed refining capacity of 3.52 million b/d because of upcoming scheduled maintenance program unless refineries currently shut unplanned will come back online, according to Platts calculations based on industry information.

S Korea

**SK Innovation's main refining unit SK Energy with a combined capacity of 840,000 b/d cut its crude run rate to 85% in March, compared with 95% a year earlier, and it will further lower run rate in April and beyond.

**SK Energy has also delayed commercial production from its newly-built 40,000 b/d vacuum residue desulfurization due to the market uncertainty.

**GS Caltex with a combined capacity of 800,000 b/d has conducted regular crude distillation maintenance in March, earlier than originally scheduled.

**S-Oil which has 250,000 b/d and 89,000 b/d condensate fractionation units said it has no plans yet to reduce its run rates but hinted at run cuts rate by saying it is monitoring the market very closely.

**Hyundai Oilbank which runs two CDUs with 520,000 b/d and 170,000 b/d condensate splitters said it has lowered its crude run rate to 90%. It declined to comment on whether it would cut the rate further.

Trade flows

Imports

**China's crude oil imports went up 3.4% year on year to average 10.52 million b/d over January-February, compared with an average of 10.16 million b/d in 2019 and 10.76 million b/d in December 2019, preliminary data from General Administration of Customs show.

**Chinese independent refineries' crude imports rebounded 11.6% to 12.2 million mt, or 2.88 million m b/d in March, from six-month low of 10.9 million mt in February, on increased deliveries to Zhejiang Petroleum & Chemical, a Platts' survey showed.

**India's No. 1 state-owned refiner Indian Oil Corp. issued a force majeure declaration to its crude suppliers in the Middle East as its sales of refined products, including gasoline, diesel and jet fuel, fell by about a third.

*India's No. 3 refiner Hindustan Petroleum Corp Ltd invoked force majeure on its Iraqi crude supplies after domestic demand slumped because of the nationwide lockdown.

Exports

**China exported 10.75 million mt of oil products in January-February, slowing to a year-on-year growth of 16.6% from 21.3% in 2019, customs data showed.

**China's gasoline, gasoil exports are expected to hit record highs in March as product stocks remain high after lockdown, but the volumes should fall in April due to diminishing demand overseas, especially for jet fuel, according to traders and analysts.

**China's Sinopec sees limited overseas outlets for products exports in Q2 due to the epidemic situation around the globe, Sinopec's senior vice president Ling Yiqun said.

**Indian refineries are also trying to get rid of their gasoil and jet fuel surpluses and this demand pushed up Asian Long Range 2 tanker premiums over the LR1s on the Persian Gulf-UK Continent route to a record high of $1.5 million April 1. An unprecedented lockdown because of the coronavirus pandemic has reduced local demand and caused the exportable surplus to balloon.

Prices

**The average for front-month cash Dubai in March was $33.70/b, down 37.8% from February, when the contract averaged $54.22/b, according to Platts data. The Middle East benchmark crude marker sank to a new record low at $21.20/b on April 1.

**The FOB Singapore 92 RON gasoline crack against front-month ICE Brent futures on April 1 was assessed at minus $6.87/b, down from plus $5/b on January 2, 2020, Platts data showed.

**The FOB Singapore jet fuel physical crack spread against front-month cash Dubai nosedived by $11.54 or 79% since the start of the year to $3.08/b on April 1, Platts data showed.

**FOB Singapore gasoil physical crack spread against front-month cash Dubai has fallen by $2.06/b, or 13% since the start of the year to $13.87/b on April 1, Platts data showed.