China's Shandong independent refiners raise Nov crude throughput by 4% from Oct

Singapore — Crude and bitumen blend throughput at independent refineries in China's Shandong province rose 3.8% month on month to 10.75 million mt in November, or 2.62 million b/d, S&P Global Platts calculations based on JLC data showed Dec 8.

This equates to an average refinery run rate of 76% in November, up from 73.2% in October, taking into account the 30 days in November and 31 days in October, the calculations showed.

Domestic refining margins, which fell by Yuan 66 ($9)/mt in October, started to rebound in November, providing enough boost for refineries to adjust their run rates higher in the month.

The margins for cracking imported crude rose around Yuan 103/mt to Yuan 202/mt in November, due mainly to a decline in crude prices over the same period, according to JLC's calculations.

Driven by the improvement in domestic margins, Luqing Petrochemical and Lanqiao Petrochemical each restarted operations at a crude distillation unit in the second half of November, which supported overall crude throughput.

Crude stocks at major Shandong ports remained sufficient throughout the month to maintain the crude throughput. Combined port stocks rose 1.4% on month to 5.6 million mt at end November. The major Shandong ports include Qingdao, Dongjiakou, Yantai, Rizhao, Longkou, Laizhou and Dongying.

The run rates are expected to be stable to slightly higher in December due to scheduled maintenance at a few units, according to market sources.

JOHAN SVERDRUP CRUDE

A total 7.67 million mt of Norway's Johan Sverdrup crude was processed by the independent refineries over January-November, compared with none last year.

The medium sweet Johan Sverdrup crude debuted in the Shandong refinery complex in January and rose quickly to become the private refining sector's third-most favored feedstock grade in both November and over January-November behind Russia's ESPO and Brazli's Lula crude.

These three grades were followed by Murban crude and Oman Blend from the Middle East. A total 440,000 mt of Abu Dhabi Murban grade was cracked by ChemChina's Huaxing Petrochemical and Changyi Petrochemical, as well as Hongrun Petrochemical and Shengxing Petrochemical, in the month.

In total, the private sector cracked 3.56 million mt of Murban over January-November, up 439% year on year.

Murban crude will be added to China's Shanghai International Energy Exchange or INE as a deliverable crude into its futures from June 1 next year.

In total, 33 grades of crude were cracked by the private refiners in November, compared with 32 in October and 36-38 over July-August, when imports flooded in amid weak competing demand from other international importers.

OIL PRODUCT STOCKS FALL 62%

Combined stocks of gasoil and gasoline fell 61.9% on month to 437,000 mt in November, the lowest since January 2014.

This came after major oil companies Sinopec and PetroChina started to procure oil products from Shandong independent refineries from mid-November, which helped to deplete stocks.

This was despite independent refineries increasing their combined output of gasoil and gasoline by 6.6% on month to 8.367 million mt in November. For gasoline, output surged 15.4% on month to 3.04 million mt as oil majors increased their purchasing.

Top 10 imported crudes cracked by Shandong-based independent refineries

(Unit: '000 mt)

Oil product output, sales

(Unit: '000 mt)

Source: JLC, S&P Global Platts Survey