Chinese privately held oil refineries' run rates may rise in the first half of September as fuel demand increases, according to C1 Energy, a commodity researcher.

The so-called "teapot" plants in eastern China's Shandong province may boost processing to 45 percent of capacity next month from 38.6 percent on Aug 22, C1 Energy said. The run rates may stay above 40 percent next month, it said. The seasonal demand for diesel in September and October will spur production from facilities, according to C1.

Teapot refineries account for about a third of China's fuel-oil imports, which they use as a feedstock to produce gasoline and diesel. The plants increased their processing for a sixth week to the highest level in more than three months last week on anticipation that the government will increase gasoline and diesel prices next month, Oilchem.net said last week.

The teapot plants in Shandong province have a combined capacity of about 90 million tons a year, or 1.8 million barrels a day.

China Daily-Agencies