China independent refineries' April crude imports up 8% at 13.2 mil mt from March

Singapore — Crude imports for China's independent refineries further rebounded 8.3% at 13.19 million mt in April, or 3.22 million b/d, from 12.2 million mt in March, with Shandong independent refineries booking more cargoes last month, showed a monthly survey by S&P Global Platts Friday.

This was largely in line with market expectation that April imports were likely to be slightly higher at around 13 million mt, Platts reported earlier.

Looking forward, more cargoes will flood into the Shandong market in late May and June as refineries rushed to book cargoes when prices plunged in March.

The April rebound was a second month-on-month consecutive build up from a six-month low at 10.9 million mt in February, when more than 10 refineries shut for maintenance due to negative refining margins in Shandong.

On a year-on-year basis, the April imports were also 45.1% higher from a year earlier, when Hengli Petrochemical (Dalian) Refinery first started to import crudes, while Zhejiang Petroleum & Chemical had not started operations yet.

Total imports by Shandong independent refineries increased by about 11.5% on the month at around 8.9 million mt in April from 8 million mt in March, contributing to the bulk of the increase for the month.

The demand increase was supported by higher run rates in April, when most refineries were enjoying huge profits.

The combined run rates at Shandong's independent refineries increased to around 73.5% in April, up 18.4 percentage points from last month, according to JLC, a Beijing-based energy information provider.

Top five April importers

The top five importers received a combined 6.95 million mt of crudes in April, accounting for about 52.3% of the total imports for the month.

Those included Hengli Petrochemical (Dalian) Refinery, Zhejiang Petroleum & Chemical, ChemChina, Dongming Petrochemical, and Hongrun Petrochemical – largely those with huge capacities.

Hengli and ZPC were the top two leading importers, respectively, on the list.

Those two giant refineries operated at high run rates of around 115% and 120%, respectively, in April, leading to high consumption of crudes.

"More than 10 cargoes are expected to come each month in May and June," said a source with Hengli Petrochemical.

Total imports by Hengli were down slightly 8.3% on the month at 1.99 million mt, while ZPC's imports rose 14.8% on the month from March.

But imports by ChemChina witnessed the biggest growth at 167.9% last month.

Last month, a total of 27 independent refineries and nine trading companies imported 36 grades, according to the Platts survey. This compared with 37 grades by 30 refineries and one trading company in March.

May imports to jump

Crude imports into the major ports of Qingdao, Dongjiakou, Yantai and Rizhao, which can handle VLCCs, are likely to jump further from April, according to port sources.

"Quite a lot of cargoes are expected to arrive from the second half of May," said a port source with Qingdao.

The total arrivals into Qingdao and Dongjiakou ports are expected to be at least 2 million mt higher from last month, he added.

Refineries that used to book three or four cargoes for one month are likely to take around five to six cargoes this May, said sources.

"The low crude prices have attracted quite a lot of buying," said a trader source.

Market participants expected that the total imports are likely to rebound to around 14 million mt to 15 million mt in May.

The Platts 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 in Tianjin, Zhoushan and Dalian for the sector.

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 the tanks.

The 38 refiners had been awarded a combined total of 129.01 million mt of import quotas in the first batch, accounting for 84.5% of the county's total allocations for independent refineries in three batches.