Independent refineries in China's eastern Shandong province, Hebei
province and Ningxia province had imported in March a total of 10 million mt,
or 2.36 million b/d, of crude oil, up 21% from a revised 8.03 million
mt in February, a monthly survey by S&P Global Platts showed Friday.
The February imports were revised up as several cargoes imported in late
February which also finished offloading discharges were also included.
The higher import level for the month, was in line with the increasing
feedstock demand at refineries, which had raised runs in March.
Operating rates at the 42 independent refineries surveyed by
Beijing-based energy information provider JLC rose to 61% of capacity in March
from 56% in February, suggesting that consumption of feedstock also have
The cargo count for March comprises parcels that arrived into ports in
Shandong and Tianjin and completed discharge operations through the month, as
well as a few cargoes that arrived in late-February but only completed
offloading in early-March.
Crude cargoes counted for the month include imports by refineries that
have import quotas, as well as those that have no quotas but are buying from
those with quotas.
The volumes imported by trading companies like PetroChina, Sinochem,
Mercuria, Trafigura, Kunyang and Yijia that are dedicated for independent
refineries are also included.
A total of 19 independent refineries with quotas on hand in March,
including 16 independent refineries in Shandong, Xinhai Petrochemical in Hebei
and Baota Petrochemical in Ningxia, received 7.89 million mt of crude, up 40%
from the previous month.
The biggest increase was seen from the imports by Hongrun at 323%. The
refiner last month had imported a total of 1.237 million mt of crudes,
including a 270,000 mt of Arab light crude, 210,000 mt of Vasconia crude, as
well as Djeno, Sapinhoa, Saturno, Clov, Forties and Azeri light, each of 1
Those 19 refineries have imported a total of 18.194 million mt of crudes
over January-March, leaving unused quotas for the first batch at 33.806
million mt, according to Platts calculations.
Several independent refineries in Shandong, however, have recently been
suffering from a quota shortage.
The refiners in this category include Shandong-based Chambroad
Petrochemical, Haiyou Petrochemical and Baota Petrochemical in Ningxia
province, which had been allocated the lowest proportion against its ceiling
Haiyou in March had failed to take one cargo of Angola crude imported by
CNOOC, as it did not have enough quotas left, according to market sources.
Those refineries have already submitted applications for the new round of
quota allocation to provincial department of commerce in the past weeks, but
were told the new round was unlikely before the end of June.
The refiners will either need to lower throughputs or buy barrels from
the domestic spot market if the new allocations are not issued on time, market
In addition, some refineries also were buying quotas from those with more
quotas left. Therefore, the fee of buying the quotas were also raised to
around Yuan 150/mt in March, from Yuan 120/mt in February.
On the other hand, some traders were also hesitant to take positions in
the international crude market, fearing not being able to find buyers with
enough quotas on hand.
Russian crudes, including ESPO, Sokol and Sakhalin were the top choices
for independent refineries in March at 1.575 million mt, up 45% from February.
Meanwhile, Angola crudes also increased 94% to 1.53 million mt in March.
But imports of Venezuelan crudes have shrunk by 23% month on month to
961,000 mt in March, which was in line with the market expectations.
Outputs of heavy crudes have been cut after the OPEC agreement, thus
the supply of Venezuelan heavy crudes have become tight, said a trader source.
Prices of Venezuelan Merey crudes have increased to the same level of
WTI, up from WTI minus $2 weeks ago. Nevertheless, buyers still need to pay
the full cargo value in advance and then wait for weeks for the delivery to
come, according to the trader source.
In combination with the tight supply of Merey crude, strong demand of
asphalt in recent weeks also supported the buying appetite of Merey crudes,
which has a better yield of asphalt.
Chambroad and Dongming Petrochemical have been the major buyers of Merey
crudes in recent months.
Crudes from UK -- Forties, Ekofisk have gained popularity among
independent refineries in March, with total imports rising 388% month on month
to 395,000 mt.
MORE CRUDES FROM US
Other than these regular crude grades, independent refineries also have
started to try out new grades in March, with more cargoes from the US to come
in April and May.
Independent refineries usually choose the most economical crude grades
among those offered to them.
Looking to April, Wonfull Petrochemical is looking to receive 1 million
barrels each of Mars and Thunderhorse cargoes, and Dongming Petrochemical to
receive 1 million barrels of SGC crude from the US.
"We bought because they are quite economical," said a source with
Wonfull in May will continue to receive 1 million barrels of Mars crude
from the US.
--Edited by Arnab Banerjee, firstname.lastname@example.org