CHINA DATA: Bitumen blend tops May crude imports for independent refiners

The inflows of bitumen blend for China's independent refineries in Shandong jumped 15.2% month on month to a record high of 2.64 million mt, becoming the most popular imports in May, ahead of the government's introduction of a consumption tax on the grade, data collected by S&P Global Platts showed on June 4.

A total 22 of bitumen blend cargoes were discharged into Shandong ports in May, compared with 2.29 million mt in 21 cargoes in April.

"Bitumen blend cargoes flood in Shandong in the second half of May, some have been discharged, the rest are in rush to be discharged before the deadline. To meet the deadline, some were even diverted to ports in Northeast China due to the tight capacity of storage tankers in Shandong," said a trade source.

At least two cargoes -- carried by ships Veronica and Hecate -- have been diverted from Shandong to be discharged into Liaoning province in northeastern China last month, Platts data showed.

A few traders said that around 3 million mt of bitumen blend barrels could be discharged and declared to the customs by June 12, since the announcement regarding the imposition of the consumption tax on May 14.

Bitumen blend is typically crude cargoes blended off Malaysian waters with heavy grades, mostly Venezuelan Merey in recent years, which are used as feedstock to produce asphalt for paving roads.

Independent refineries, especially those in Shandong province, are the major buyers of bitumen blend as the barrels are consumption tax free and refiners are not required to use crude import quota when bringing in the cargoes.

In recent months, more Iranian crudes also have been declared as bitumen blend for the sake of saving crude import quotas. In May, around 1.34 million mt of 10 such cargoes were declared as bitumen blend.

These boosted bitumen blend imports by the Shandong independent refineries to reach about 8.86 million mt in January-May, thus becoming the second most preferred grade during the period, Platts data showed.

Malaysia top supplier in May

Supported by the heavy inflows of bitumen blend and Nemina blend, total imports from Malaysia surged 150.7% to 13.11 million mt in the first five months of 2021. The country surpassed Russia's 11.4 million mt to become the top supplier to China's independent refining sector.

Shandong province in May received 3.75 million mt of bitumen blend and other crudes from Malaysia, rising 28.6% from April to grab the top spot.

Those included 1.11 million mt of Nemina Malaysia, out of which 1 million mt, or 90%, were actually Iranian crudes, according to market sources.

Together with bitumen blend and Nemina, around 2.34 million mt of Iranian crudes have been discharged last month, bringing the total Iranian imports via this channel to reach 8 million mt over the first five months of the year, according to Kpler data and market sources.

ESPO losing favor

Meanwhile, Russia's ESPO has lost favor and the inflows were only at 869,000 mt in May, down 57.1% on the month and 67.4% year on year.

However, it was still the top grade over January-May at 9.07 million mt, although down 5.4% year on year as bitumen blend ate its market share.

Platts collects information covering crude and Bitumen Blend imported for independent refineries based in Shandong province, as well as 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 are discharged into tanks.

The 38 refiners have been awarded a combined total of 104.68 million mt of crude quotas in the first batch in 2021, accounting for 88.3% of the county's total allocations for the independent refining sector to date.

Top crude suppliers for China's independent refiners (000 MT)

Top crude for China's independent refiners (000 MT)

Source: S&P Global Platts