CHINA DATA: Shandong independent refiners to keep Sep run rates above 70%

Singapore — China's Shandong independent refineries are likely to maintain run rates at around 70%-73% in September as refining margins are steady, while only one major maintenance has been scheduled, industry sources told S&P Global Platts Sept. 8.

In August, these independent refineries' run rate stood at 72.7%, unchanged from July, data from local information provider JLC showed.

The 5 million mt/year Dongying Petrochemical is the only refinery shut for a 45-day maintenance since Sept. 3. The rest of these refineries will continue to operate at steady rates as the cracking of imported crudes is profitable. Furthermore, the heavy inflow of crude oil since May has left plenty of feedstock available for independent refineries to sustain their operations.

Crude stocks at major Shandong ports remain sufficient despite having declined to around 4.74 million mt as of Aug. 27, after touching a high of 5.22 million mt end-June, the JLC data showed.

The drop was mainly contributed by Qingdao and Dongjiakou ports, which handles about half of the crude imported by independent refineries entering the country via Shandong. Apart from these two ports, the other major ports are Yantai, Rizhao, Longkou, Laizhou and Dongying.

AUGUST THROUGHPUT STABLE

In August, the 45 refineries surveyed by JLC consumed 11.22 million mt, or 2.65 million b/d, of crudes and bitumen blends, stable from July. These refineries cracked 36 imported crude grades last month, compared with 38 in July, and 39 in June.

Among the top 5 crudes, the consumption of Norway's Johan Sverdrup, marked the biggest month-on-month increase of 41.5% in August, to 920,000 mt.

The grade first made it to the top 10 list of crudes imported by Shandong independent refineries in March at 350,000 mt, and continued climbing till it became the third-highest crude grade consumed last month.

Meanwhile, Western Africa's light crudes were losing favor among the independent refineries as they have not been able to regain their place among the top 10 crudes since July.

HEAVY CRUDE, BITUMEN BLEND

Consumption of three popular heavy crudes -- Castilla, Cold Lake and Basrah Heavy -- surged 40% to 910,000 mt in August from 650,000 mt in July, in line with the higher consumption of bitumen blend.

With the substantial increase in the consumption of Cold Lake, all of these three heavy crudes were listed in the top 10 favored grades in August, compared with only Castilla and Basrah Heavy in July.

Meanwhile, four independent refineries cracked a total of 490,000 mt of bitumen blend in August, 16.7% higher from the 420,000 mt in July.

This is the second month-on-month increase in the consumption of bitumen blend, and also the highest level consumed since October 2015. It has returned to the market as an alternative feedstock to heavy crudes, after refineries ran out of crude quotas.

Bitumen blend used to be a mixture of heavy crudes, like Venezuela's Merey grade, blended with various heavy materials off Sungai Linggi in Malaysia.

Shandong independent refineries' crude feedstock ('000 mt)

Top imported crudes cracked by Shandong independent refineries ('000 mt)

Gasoline, gasoil output, sales ('000 mt)

Source: JLC