CHINA DATA: ESPO, Oman crude remain favorites for independent refiners in October

ESPO remained the most imported crude grade by China's independent refiners in October, while shipments from Russia rose to a one-year high and from Oman jumped sharply to make the Middle Eastern producer the second-biggest feedstock supplier in the month, data compiled by S&P Global Platts showed Nov. 9.

While total crude imports by China's independent refiners were down almost 25% year on year at 13.087 million mt in October, supply from Russia edged up 0.5% to 2.48 million mt in the month and was up 8.6% from September, Platts data showed.

Inflows of the Oman grade surged 136.5% year on year to 2.19 million mt and were up 203.2% from September, while total imports from Oman at 2.287 million mt doubled year on year and were up 200% from September. Around nine cargoes comprising 1.22 million mt of the total were reportedly Iranian rather than Omani crudes, according to some port sources.

While ESPO crude imports rose 10% month on month to 2.4 million mt in October, buying interest in early November has been thin, with few deals heard. Offers for ESPO were heard to be around $4-$4.20/b on a DES Shandong basis against ICE Brent futures, according to trade and refinery sources.

"There are still a few December cargoes unsold in the market," a refinery source said. Most independent refineries have yet to start procurement for January.

Despite the month-on-month increase in October, total imports from Russia over January-October were down 13.8% year on year at 22.66 million mt.

Imports from Brazil almost halved to 11.35 million mt over January-October from 21.8 million mt a year earlier, despite an 87.2% month-on-month surge to 322,000 mt in October, although that figure was down 89% year on year.

Brazil was previously a top crude supplier to China's independent refineries behind Russia and Saudi Arabia, but quality issues with some cargoes have prompted some of the refiners to look for alternatives, according to market sources.

Total imports from Iraq also more than halved to 7.16 million mt over January-October from 14.86 million mt a year earlier.

Interest in Malaysian grades

Malaysia overtook Russia to become the top feedstock supplier to China's independent refineries over January-October due to continuing demand for various blended crudes and strong appetite for bitumen blend, with imports from Malaysia rising 96.3% year on year to 23.9 million mt over the 10-month period.

Bitumen blend cargo arrivals from Malaysia surged 204.8% year on year to comprise 13.7 million mt of the 10-month total, while Nemina grade inflows rose 178.5% to 7.24 million mt.

Around 735,000 mt of bitumen blend was discharged in October, down 13% from September.

In addition to bitumen blend, which does not require a quota to be imported, fuel oil remained in demand as a supplement feedstock, with 252,000 mt arriving in October, up 107% month on month.

Platts collects information covering feedstocks imported by independent refineries in Shandong province, Tianjin, Zhoushan and Dalian, Lianyungang, including 37 crude import quota holders, and other non-quota holders.

These 37 refiners have been a combined 158.38 million mt of crude quotas to date in 2021, accounting for 86% of the total allocations to the independent refining sector in the year.

Top crude suppliers for China's independent refiners:

(Unit: '000 mt)

Top crude grades for China's independent refiners:

(Unit: '000 mt)

*Including imports for others

Source: S&P Global Platts