Huang Haidong missed the flush times in 2010 when his refinery in eastern China could not produce diesel fast enough to fill the trucks lined up outside.

"There was a fuel shortage," said Huang, who works as a supply manager at one of 40 "teapots", or small, privately held plants, in Shandong province.

"We ran our units at more than 80 percent (of processing capacity) at that time and still couldn't meet demand. But things changed after the expansion frenzy."

Huang's plant cut processing rates by half over the past four years as China's refining capacity expanded 33 percent and economic growth slowed in the world's second-largest oil consumer.

While the country can process about 13.4 million barrels per day of crude, the International Energy Agency estimates demand this year will be just 10.3 million bpd.

The 46 percent plunge in world oil prices since June has benefited Chinese consumers with the lowest gasoline prices since 2010, but provided little solace for refiners.

The added refining capacity has led to losses at privately owned plants for the first time since 2008, according to ICIS-C1 Energy, a Shanghai-based consultancy.

Profits at State-owned refineries, including those operated by China Petroleum & Chemical Corp (known as Sinopec), are also shrinking. Moody's Corp has forecast that demand growth will slow to between 3 percent and 5 percent next year from 10 percent in 2010-12.

"China is most certainly in overcapacity right now and there are plans to expand even more," Simon Powell, the head of Asian oil and gas research at CLSA Ltd in Hong Kong, said on Dec 11. "There's likely already 2 million barrels a day of capacity more than is needed."

China, which trails only the United States in fuel consumption, added about 723,000 bpd of processing over the past four years, ICIS-C1 estimated. With economic growth forecast at 7.4 percent this year, the slowest rate since 1990, fuel demand is set to decelerate.

Capacity will increase to 14 million bpd by the end of 2015, according to China National Petroleum Corp, the country's biggest energy company. That is about 78 percent of what is currently available in the US, data compiled by Bloomberg show.

China will add 500,000 bpd of capacity in 2015 and another 602,000 bpd in 2016, according to ICIS-C1.

"If all the refining projects proceed as scheduled in the next few years, we'll see a very severe supply glut in the domestic market by 2019," said Li Li, a research and strategy director at ICIS-C1, from Guangzhou on Dec 5.

"As much as 40 million metric tons of oil products will need to flood overseas markets annually."

China is starting to divert an increasing proportion of crude imports into emergency reserves. The nation probably resumed strategic stockpiling in November amid the global oil-price slump, official data show.

Refiners are expected to adjust plant expansion schedules to their outlook for fuel consumption, meaning they can delay projects to avert a refining glut, according to Citigroup Inc.

"For the next two years, it'll be relatively balanced between capacity additions and demand growth," said Ivan Szpakowski, an analyst at Citigroup in Hong Kong. "Capacity in 2017 still has significant risk depending on what the market environment looks like."