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Chinese independent refiners' crude imports fall 14.4% on month

Singapore — Crude imports for China's independent refineries fell 14.4% in November to 11.9 million mt, or 2.91 million b/d, from the record high of 13.9 million mt in October, a monthly survey by S&P Global Platts showed Thursday.

Crude imports for China's independent refineries fell 14.4% in November to 11.9 million mt, or 2.91 million b/d, from the record high of 13.9 million mt in October, a monthly survey by S&P Global Platts showed Thursday.

Despite the declines, including the 0.2% year-on-year decrease, the November volume remained the second highest monthly level in 2019.

Meanwhile, a higher average run rate in the sector than in October suggested a stock draw.

The latest survey of 44 independent refineries in Shandong conducted by local information provider JLC showed that the sector's November operation rate was around 69.8%, about three percentage points higher from October.

"The refining margins for most refineries are still good," said an analyst with JLC. Refining margins were supported by the low-pour point gasoil demand in winter, although the driving demand for gasoline have waned slightly, refinery sources revealed.

Total crude oil imports for the sector stood at 118.14 million mt, up 26.8% year on year, Platts data showed.

While looking for December, it is likely the total imports will stay unchanged or slightly lower in the coming months, sources said.

"Refineries still booked heavily for December arrival cargoes in order to use up crude oil import quota by year-end, so it's likely the arrivals will keep high," said a trade source in Shandong.

HAIKE SHOOTS TO TOP THREE

Crude imports by Haike Petrochemical posted a monthly rise of 23.1% amid restocking activity, pushing the company into the ranking of top third importers in November.

Haike received various crude grades, including Lula and Mero from Brazil, Murban from the Middle East, and ESPO from Russia, totaling 789,000 mt.

That compared with just 268,000 mt a year earlier and 641,000 mt in October.

Meanwhile, the imports by Chambroad have seen the biggest increase of 207.9% from October, to 665,000 mt, making it the top fifth importer last month.

Crude grades imported by the refinery were mostly heavier, with 270,000 mt of Basrah Heavy crude in two cargoes, and 135,000 mt of Lenghun Blend. The specifications of Lenghun Blend looks quite similar to Merey crude from Venezuela.

In addition, Chambroad also imported 130,000 mt of Iracema and 130,000 mt of Lula crude.

Besides those two new comers in the top five importers, the rest three are regular big buyers - Hengli, ChemChina, and Dongming Petrochemical.

Hengli has received five VLCC cargoes of crudes, with one from Iraq and the rest all from Saudi Arabia, stable on the month. It competes with ChemChina for the top rank position from time to time.

ChemChina last month imported about 1.33 million mt of crudes, about 9.3% lower from the previous month.

Russian grades, including 500,000 mt of ESPO and 330,000 mt of Urals, accounts for about 62% of ChemChina's total imports. The rest are 233,000 mt of Nemina crudes from Malaysia, 132,000 mt of Murban crude, and 135,000 mt of Lula grade.

Crude imports by the fourth importer, Dongming Petrochemical, have decreased by 45.6% on month to around 683,000 mt in November.

Dongming favors heavy grades, with 273,000 mt of Castilla crude, 260,000 mt of Oman, and 150,000 mt of Napo crude from Ecuador.

QINGDAO HANDLES 45% OF SHIPMENTS

Crude shipment arrivals via Qingdao port, with Dongjiakou port included, decreased 1.2% on the month to 5.34 million mt in November, or 45% of the independent sector's total intake during the month. That compared with a 39% of the total in the previous month.

"The expected arrivals into Qingdao will probably remain considerable in December, as some refineries still prefer to use up the quotas by year end," said a port official.

Apart from all those cargoes discharged over the month, two cargoes of crude, which arrived in late October, got held up in Qingdao port. The reason is not immediately known.

The two cargoes, loaded via 150,000-dwt vessels Samsara and Smyrni, were originally designated for Shengxing Petrochemical, according to sources.

The Platts November survey covers crude barrels imported by 38 refineries with import quotas, as well as others without quotas, through ports mostly in Shandong province, as well as Tianjin, Zhoushan and Dalian for the sector.

The barrels include those imported directly by the refiners, as well as cargoes bought by trading companies on behalf of the independent refiners.

The 38 refiners had been awarded a combined total of 133.65 million mt of import quotas until the end of October, accounting for 84% of the county's total allocations for independent refineries in three batches.

-- Analyst Daisy Xu, daisy.xu@spglobal.com

-- Edited by Aastha Agnihotri, aastha.agnihotri@spglobal.com