CHINA DATA: Malaysia is top feedstock supplier to independent refiners Jan-Nov

Malaysia overtook Russia to become the top feedstock supplier to China's independent refineries over the first 11 months of this year, mainly due to a robust demand for various blended crudes and a strong appetite for bitumen blend, according to data from S&P Global Platts on Dec. 7.

Imports from Malaysia climbed 85.9% year on year to 25.36 million mt over January-November.

Last month, the volume of Malaysian bitumen blend discharged surged 152.2% year on year to contribute 14.19 million mt to the total, while inflows of Nemina grade rose 150.9% to 7.34 million mt, in addition to other blended grades like Mal Blend, Singma, as well as Malaysian Blend.

In November, China's independent refiners imported around 476,000 mt of bitumen blend, about 35.2% lower month on month. At the same time, around 604,000 mt of fuel oil was discharged at Shandong ports, up 139.7% from a low base of 252,000 mt in October.

At least 483,000 mt of those imports, which were claimed to be fuel oil, were reported as bitumen blend in previous months, according to port sources.

It is easier to obtain a tax deduction if cargoes are reported as fuel oil rather than bitumen blend, reflecting an increasing trend in this practice, they said.

After June 12, bitumen blend imports are subjected to an additional consumption tax of Yuan 1,218/mt ($187.94/mt), on top of the existing 8% import tax and 13% value added tax, while fuel oil is subjected to the same amount of consumption tax and VAT, but enjoys 1% import tax.

Both fuel oil and bitumen blend imports do not require a crude import quota, an option which independent refineries are free to explore should they face a shortage of feedstock towards the year end.

Iranian crudes demand strong

Iranian crudes remained competitive in November with the arrival of 1.87 million mt in 13 cargoes.

Around 609,000 mt had been reported as Oman crude, bringing the total import of the grade to almost 1.3 million mt in November.

This compares with a record high 2.19 million mt of Oman imported by independent refineries in October, up 203.2% from September, Platts data showed.

Given the sharp increase in Iranian crudes, the import of other crude grades have declined over the year, with those from Brazil and Angola hardest hit.

Share from traditional suppliers falls

Imports from Brazil dropped 50.2% over January-November to just 11.75 million mt, from 23.6 million mt a year earlier. Angola met a similar fate, supplying just 11.74 million mt over the 11 months, an 18.2% decline compared with the same period a year earlier.

While imports from Malaysia and the Middle East have soared in the past few months, inflows from traditional suppliers, including Russia have dropped.

Russia, Brazil and Angola used to be the top three suppliers to China's independent refineries. But with blended crudes from Malaysia having increased, and new refining complexes favoring grades from the Middle East, including Saudi Arabia, these three prominent suppliers have taken a back seat.

Total imports from Russia, fell 12.3% year on year to 24.99 million mt over the first 11 months of this year, compared with 28.48 million mt last year.

At the same time, imports from the UAE have grown 18.1% year on year to 15.2 million mt over January-November, while imports from Oman rose 29% year on year to 13.485 million mt.

Platts collects information on 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 a combined 158.38 million mt of crude quotas to-date in 2021, accounting for 86% of the total allocation to the independent refining sector in the year.

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

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

*Including imports for others

Source: S&P Global Platts data, company sources