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CHINA DATA: Independent refineries' Jan crude imports jump 35% from Dec to 18.16 mil mt

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CHINA DATA: Independent refineries' Jan crude imports jump 35% from Dec to 18.16 mil mt

Highlights

Volume surges on new quota allocation for 2021

Imports to ebb in coming months on weak demand

Hengli, ZPC contribute to Jan increment

Singapore — China's independent refineries imported 18.16 million mt, or 4.3 million b/d, of crude and bitumen in January, a 35.1% on the month jump, as these privately-held companies started to actively discharge the oil off tankers that had been floating near Shandong ports since December 2020 as soon as the first batch of 2021 import quotas were granted late last year.

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The volume in January was the third highest on record, just below the historical high of 19.8 million mt recorded in July 2020 and the second-highest at 18.7 million mt in May 2020.

On a year-on-year basis, the January imports represented a 25% growth from the 14.525 million mt in January 2020.

Most of the refineries ran out of crude import quotas prior to the year-end, leaving their cargoes waiting in Chinese waters. These hungry refineries were only able to bring in their feedstock after they had received fresh 2021 quotas, which, as expected, pushed import volumes higher in January.

Jincheng Petrochemical, Luqing Petrochemical and Lijin Petrochemical were among the independent refineries that had not discharged any cargo in December, simply because they had no available quotas to do so.

In late December, China's Ministry of Commerce issued 118.52 million mt of crude import quotas to 43 qualified independent and non-major state-owned refineries in the first batch of quotas for 2021, 19% more than the same 2020 batch, enabling these refineries to bring their cargoes onshore from Jan. 1 onwards.

FEBRUARY OUTLOOK

The sector's imports are likely to ease in February as oil product demand slows ahead of maintenance season, refining sources said.

"Slightly fewer cargoes will arrive in February have been seen compared with January, down by about 1 million mt," a port source in Shandong said.

Furthermore, Lunar New Year falls in February this year and crude imports for these independent refineries usually slow due to the holidays, according to Platts' data.

Demand for transportation fuel is also expected to decline from January during this Lunar New Year as the Chinese government has limited transportation to prevent the widespread of COVID-19, Platts reported earlier.

In March and April, the inflow is likely to remain at relatively low levels as at least five independent refineries have initial plans to shut for maintenance in Q2.

TOP IMPORTERS IN JAN

In January, the integrated Hengli Petrochemical (Dalian) and Zhejiang Petroleum & Chemical contributed to the bulk of incremental imports.

Their combined imports hit 4.7 million mt in January with the new quotas, surging 61.6% from the 2.91 million mt inflow in December.

About 94% of their January imports were Middle Eastern grades, the remaining 267,000 mt were Forties from the UK taken by ZPC.

Both refiners used up their 2020 quotas, each had been awarded 20 million mt, prior to the year-end. The quota shortage led them to place at least 6.55 million mt of their imports in bonded storage, instead of bringing them in to their plants, and Hengli had to take imported crude from domestic trading houses in order to sustain its high throughput.

In Shandong, ChemChina maintained its lead with 1.37 million mt of imports which arrived in January, 7.1% higher than December.

It was followed by Qingdao-based trading company, Lawen Namu, whose January imports jumped 212% on the month to 1.2 million mt. Most of its imports were blended grades.

Platts collects information covering crude and bitumen blend imported by independent refineries in Shandong province, 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 were discharged into tanks.

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

Independent refineries' feedstock choices in Jan (Unit: '000 mt)

Buyer
Jan-21
Grades
Hengli
2,710
Arab Heavy/Arab Medium/Basrah Light/Khafji/Kirkuk/Kuwait
ZPC
1,990
Arab Extra Light/Arab Light/Arab Medium/Das Blend/Forties/Oman/Upper Zakum
ChemChina
1,371
Banyu Urip/ESPO/Iracema/Lula/Nemina/Oguendjo/Upper Zakum
Lawen Namu
1,201
Nemina/Oman/Varandey
PetroChina
809
ANS/Gindungo/Johan Sverdrup/Castilla
Dongming
808
Castilla/Gindungo/Iracema/Oman/Sururu
Jincheng
695
Banyu Urip/ESPO/Heidrun/Johan Sverdrup/Sokol
Luqing
672
Kissanje/Lula/Plutonio/Sapinhoa
Hualian
621
ESPO/Iracema/Lula/Mostarda/Napo
Xinchi
525
Fujairah Blend/Upper Zakum
Hebei Xinhai
451
Bitumen Blend/Saturno/Urals
Lijin
400
ESPO
Haike
396
Iracema/Lula/Mero/Sapinhoa
Sinochem
390
Basrah Light/Hungo
Xintai
390
Bitumen Blend/Sokol
Yihaijia
350
Bitumen Blend
Kenli
300
ESPO
Gaida
291
ESPO
Shenchi
283
Upper Zakum
Chengda
265
Clov/Johan Sverdrup
Wonfull
260
Cabinda/Mandji
Trafigura
256
Oman/Qua Iboe
Hongrun
234
Basrah Heavy/Sokol
Chambroad
230
Bitumen Blend
Hualong
230
Bitumen Blend/Johan Sverdrup
Shengxing
203
ESPO/Oman
Taifeng Hairun
200
ESPO
Zhenhua
200
Bitumen Blend/ESPO
Chenji
197
Bitumen Blend
Hengyuan
133
Lula
Qirun
133
Lula
Qicheng
130
Johan Sverdrup
Yatong
115
Djeno/Lula
Xinyue
100
ESPO
Shangang Guomao
100
ESPO
Qingdao Maofa
100
ESPO
Gaoning
100
ESPO
Qingyuan
96
Sharjah Heavy
Oceanic
95
Bitumen Blend
Total*
18,160

Source: S&P Global Platts data, company sources