China independent refineries' Feb crude imports fall to 6-month low at 2.8 mil b/d

Singapore — Crude imports for China's independent refineries fell 19.7% to a six-month low of 2.76 million b/d, or 10.9 million mt, in February, from a record-high of 3.43 million b/d in January amid the coronavirus outbreak, a monthly survey by S&P Global Platts survey showed Thursday.

On a year-on-year basis, the volume was still 11.9% higher from February 2019.

The independent refineries' crude oil imports normally decline in the month after the Lunar New Year, while significant throughput cut in February 2020 also weighed on the inflows. Lunar New Year fell in January this year.

In February, 15 independent and ChemChina's refineries in Shandong were shut, with the rest cutting throughput due to weak domestic demand for oil products amid coronavirus outbreak. This led their run rate to drop to as low as 36% from an average of 69% in January, Platts reported earlier. The 400,000 b/d Hengli Petrochemical (Dalian) cut utilization rate from 108% to 90% in February.

At the same time, the number of refineries and trading companies that imported crude in February also fell to 24 compared to 35 a month ago, Platts' survey showed.

The number of imported crude grades dipped to 33 in February from 40 in January.

Among all the importers,only eight buyers imported more in February than in January, while the rest 17 buyers imported less.

Shandong-based Luqing Petrochemical contributed most of the increases by importing 614,000 mt of crude, up 16.1% month on month, and became the fifth top importing refinery in the sector.

ZPC IMPORTS DOWN

Zhejiang Petroleum and Chemical saw biggest import cuts among the refineries, dropping 67.4% on the month to 544,000 mt in February, Platts' survey showed.

ZPC has been maintaining at a high run rate of around 105% at one crude distillation unit, and 120% at the other one in February, according to a company source.

The company will receive about five cargoes in March, in addition to one cargo that had been discharged by March 1, according to sources.

Total imports by Shandong-based refineries dropped 3 million mt or 27.5% to around 7.8 million mt in February from 10.8 million mt in the previous month.

This contributed to about 83% of the deficit volume in February.

MARCH IMPORTS TO REBOUND

Arrivals in March are likely to rebound following lower imports in February, according to market sources.

Some independent refineries have gradually resumed operation since late February as road transportation recovers, boosting oil product market slowly.

Lianmeng Petrochemical, Wudi Xinyue Petrochemical and Binyang Petrochemical resumed operations in end-February, while Yuhuang Petrochemical, Shenchi Petrochemical, as well as ChemChina's refineries, are expected to return to the market in early March.

"The run rates are likely to return to around 55% till end March," said an analyst with JLC. JLC is a Beijing-based energy information provider.

Qingdao, Dongjiakou, Yantai and Rizhao ports, which can handle VLCCs, are likely to receive more crude arrivals in March, according to Platts survey.

The combined arrivals via those four ports, are likely to increase by about 1 million mt in March, from their combined base level in February.

"The port stocks have been decreasing slowly, with refineries slowly lifting run rates," a port official said.

Sources expect that total imports for the independent refineries are likely to rebound to around 12 million-13 million mt in March.

The Platts' February survey covers crude barrels imported by 38 refineries with import quotas, as well as others without quotas, through ports mostly in Shandong province, as well as Tianjin, Zhoushan and Dalian.

The barrels include those imported directly by the refiners, as well as cargoes bought by trading companies on behalf of the independent refiners.

The 38 refiners were awarded a combined total of 83.96 million mt of import quotas in the first batch in end-December 2019, accounting for 84% of the county's total allocations for independent refineries in three batches.

Crude imports for independent refiners ('000 mt)

* Imports for independent refineries by PetroChina's trading companies - Chinaoil, PetroChina Fuel Oil

Source: S&P Global Platts data, company sources