CHINA DATA: Easing port conditions lift independent refiners' crude inflows in March

Singapore — The appetite of China's independent refiners for crude and bitumen blend posted modest growth in March from the previous month following the easing of congestion at Shandong ports, and inflows are expected to maintain similar momentum in coming months as more refineries aim to go offline for maintenance.

Import volumes of the two feedstocks were up 1.6% month on month to 3.99 million b/d in March, data collected by S&P Global Platts showed on April 1.

Major ports in eastern Shandong province -- home to the country's independent refiners -- will receive slightly fewer crude cargoes from April onwards, as their maintenance plan will take crude distillation units offline, reducing demand for feedstock, sources said.

In April, a combined refining capacity of 10.5 million mt/year will be shut at four Shandong refineries, bringing the total offline capacity to 12.8 million mt/year. This trend is expected to continue in May-June, sources added.

But there is still uncertainty over the schedules, as refineries have been quite flexible about their maintenance plan, such as the 2.2 million mt/year Kelida Petrochemical. It has postponed its maintenance plan to April from March.

New crude cargo arrivals into Shandong ports are expected to be more or less stable in the coming months, compared with March levels, due to the planned maintenance works, according to port sources.

A source with Qingdao port said that expected arrivals in April would be around five million mt, compared with the same five million mt in March, and 5.5 million mt in February.

Port sources said since March weather conditions were better than February, most of the undischarged February cargoes were discharged last month. But there would still be some undischarged cargoes left to discharge in April.

Trade sources are expecting that Zhejiang Petroleum & Chemical would increase imports in Q2 following the start of its second 10 million mt/year CDU in its Phase 2 expansion of the 20 million mt/year project.

March imports up 12.5% from Feb

Combined march imports by Shandong independent refineries -- as well as imports by Hengli Petrochemical (Dalian) Refinery and Zhejiang Petroleum & Chemical -- were up 12.5% from February levels to 16.89 million mt. Total imports in Q1 were 33.1% higher from a year earlier.

The majority of the incremental imports in March were contributed by Shandong independent refineries, which together received 13.5 million mt of crude, up 25.3% year on year.

Hengli Petrochemical received four VLCC crude cargoes in March, totaling about 975,000 mt -- a 16-month low. The volumes were down 50.5% from 2.26 million mt in February.

A company source said that the company had booked quite a few cargoes when the crude price was relatively lower during the past few months. As a result, it still had around three million mt of feedstock in tanks waiting to be processed. And ZPC's import volumes in March were up 6.9% month on month to 2.4 million mt.

However, the combined import volumes for the two companies were still 19.9% lower from February levels.

S&P Global Platts collects information covering crude and bitumen blend imported by independent refineries in Shandong province, Tianjin, Zhoushan and Dalian, including 38 crude import quota holders and non-quota holders.

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

The 38 refiners have been awarded a combined 104.68 million mt in crude quotas in the first batch, accounting for 88.3% of the county's total allocations for the independent refining sector to date.

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MARCH CRUDE IMPORTS FOR INDEPENDENT REFINERS^ (Unit: '000 mt)

^Independent refineries refer to these in eastern Shandong province: Jiangsu Xinhai Petrochemical, Xinhai Chemical in Hebei, Fengli Petrochemical in central Henan, Hengli Petrochemical (Dalian) Refinery in northeastern Liaoning province and Zhejiang Petroleum and Chemical in eastern Zhejiang province. Imports by trading companies were also for the independent refineries in the region.

*State-run firms trading for independent refineries

**Including imports for some unspecified recipients

Source: S&P Global Platts Market/Industry Survey