CHINA DATA: Independent refineries' feedstock imports up 6.7% on month in March

The combined feedstock imports for China's independent refineries in March recovered 6.7% to 14.055 million mt from the four-month low in February, but the trend is unlike to sustain in April, S&P Global Commodity Insights' data showed on April 7.

Weakening domestic demand for oil products amid the current wave of COVID-19, crude prices volatility and uncertainties in payment, shipping of Russian crudes dampened independent refiners' buying interest for the coming months deliveries, analysts said.

Independent refineries had lifted their purchase for March delivery as they expected to lift throughput when economy activities recover from Lunar New Year and Beijing Olympics, despite the volume remained 16.8% lower from the 16.89 million mt in a year ago.

Among the imports, crude rose 7.1% to 12.1 million mt from a six-month low in February. Feedstock imports include crude, bitumen blend and fuel oil. Crude imports are consumption but tax-free required to use quotas, while bitumen blend and fuel oil imports attract consumption tax.

Meanwhile, bitumen blend imports continued recovering month on month, with 4.4% more barrels discharged to reach 1.87 million mt in March. It was a nine-month high, only slightly lower from the imports of 2.04 million mt in June 2021, when the import tax came into effect.

Most of the bitumen blend were imported by Shandong independent refineries, because they were awarded 8% less crude import quotas, year on year, in the first batch allocation for 2022 at around 58 million mt. Some of them, therefore, have to switch to other feedstock.

Breakdown by buyers, the combined feedstock imports by those Shandong-based independent refineries rebounded by 11.3% month on month to 9.22 million mt in March, the data showed.

Hengli, ZPC maintain imports

Total crude imports by the integrated Hengli Petrochemical (Dalian) and Zhejiang Petroleum & Chemical were at around 4.5 million mt in March, almost flat from the 4.55 million mt in February, S&P Global's data showed.

Hengli received 27.3% more of crude month on month at 1.77 million mt in March, while ZPC's crude arrivals was 13.6% lower at around 2.73 million mt from 3.16 million mt in February.

All of the 4.5 million mt crude cargoes imported by Hengli and ZPC were from the Middle East, which are fixed by official selling prices.

However, the two refining complexes are likely to trim their crude throughputs in April, in view of the bad margins for producing petrochemicals, which will likely cap their demand for crude feedstock, sources said.

The greenfield Shenghong Petrochemical complex, on the other hand, still has no plan to start up yet, according to a company source. The initial starting date has not been fixed yet, given the current high oil prices, as well as the weak demand for oil products, which was affected by the resurgence of COVID-19.

April imports to fall

A source with Qingdao port revealed that only less than 3 million mt of cargoes have been reported to call in April for the time being, which is far less that the overall dischargements of around 5 million mt in March.

While another source with Rizhao port also said that the expected arrivals are likely to be lower, as only very few cargoes were reported so far.

Yantai port is likely to receive about 1.8 million mt of crudes for independent refineries in April, compared with the expected arrival of 1.7 million mt for March, according to a port source.

On the other hand, three refineries have entered into maintenance starting end-March, which will trim their overall consumption for feedstock imports. Qirun Petrochemical, Changyi Petrochemical and Shangneng Petrochemical, has shut for maintenance from around end-March.

S&P Global collects information covering feedstocks imported by independent refineries in Shandong province, Tianjin, Zhoushan, Dalian, and Lianyungang, including 32 crude import quota holders, and other non-quota holders. These 32 refiners have been awarded a combined 99.7 million mt of crude quotas in 2022, accounting for 93% of the total allocations to the independent refining sector in 2022.

FEEDSTOCK IMPORTS FOR INDEPENDENT REFINERS ('000 MT)

*Including imports for unspecified recipients

Source: S&P Global Commodity Insights