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Highlights

Typhoons affect discharging of crude

Around 61.59 million mt of quotas left

Zhejiang Petrochemical receives first crude cargo

Singapore — Crude oil imports for China's independent refineries in August fell 5.7% month on month and 12% year on year to 7.06 million mt, or 1.67 million b/d, a monthly survey by S&P Global Platts showed.

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The volume went against expectations of a rebound because of more typhoons in the month, making it difficult for vessels to berth and leading to fewer cargoes being discharged.

Market participants had widely expected a rebound from July since refineries would need more feedstock after returning from maintenance.

"Typhoons hit Qingdao port four times in August, and vessels could not call at the berths for almost half a month," a port source in Qingdao said.

Financial difficulties also prevented some refineries from discharging their cargoes on time. "Some refineries delayed discharging probably due to tight cash flows, so August levels remained low," a port source in Shandong said.

As a result, the sector's crude imports over the first eight months of they ear rose marginally by 0.6% year on year to around 64.38 million mt, Platts survey showed.

Platts survey covers barrels imported for independent refineries via ports in Shandong province and Tianjin, as well as those for the upcoming greenfield independent Hengli Petrochemical in Liaoning province and Zhejiang Petrochemical in Zhejiang province. The barrels include those imported directly by refiners and trading companies, which will be consumed by the independent sector.

QUOTA AVAILABILITY

Among these crude consumers, 36 were crude oil import quota holders awarded a total quota of 120.83 million mt this year. This accounts for 86.8% of the country's total crude oil import quota allocation for 2018.

With the August imports, the 36 quota holders were likely have used up 49% of their total quota, with around 61.59 million mt available for rest of the year.

It indicates sufficient availability for crude quotas, which also suggests the sector's crude imports are unlikely to be hit by quota shortages.

But not all the refineries have sufficient quotas for September-December, as some could now be short of quotas.

ZHEJIANG PETROCHEMICAL FIRST CARGO ARRIVES

The 20 million mt/year Zhejiang Petrochemical received its first crude cargo in late August, 260,000 mt of Oman crude via Zhoushan port in eastern Zhejiang province.

Elsewhere, Hengli Petrochemical received its third crude cargo of Arab Heavy last month, bringing total imports to around 660,000 mt this year.

These two greenfield refineries will each continue to receive one VLCC cargo every month for rest of the year. Both target startup later this year.

--Staff, newsdesk@spglobal.com

--Edited by Jonathan Fox, jonathan.fox@spglobal.com