|
MOSCOW (MRC) -- The rebound in China’s
crude oil refinery processing and record imports of the fuel in May would seem
to be bullish indicators that the world’s second-largest economy is recovering
strongly after the hit from the coronavirus lockdowns, said Hydrocarbonprocessing.
For
sure, the numbers are robust. But there are some other factors within the data
that give rise to caution against becoming too optimistic about the real
strength of the crude oil sector in China. The two main factors worth looking at
are the amount of crude flowing into commercial and strategic storage tanks, and
the amount of crude that is ultimately being exported back out of China in the
form of refined fuels.
China doesn’t release official data on flows into
strategic and commercial stockpiles. But an estimate can be made by subtracting
the amount of crude processed by refineries from the total volume of oil
available from both imports and domestic output.
Imports in May were
11.296 million barrels per day (bpd), while domestic output was 3.88 million
bpd, giving a total amount of 15.18 million bpd available. Refinery throughput
was 13.69 million bpd, up 8.2% from May last year and the fourth-highest on
record on a barrels per day basis.
Subtracting refinery throughput from
total available crude leaves a gap of 1.49 million bpd, presumably going into
commercial storage or the strategic petroleum reserve in May. The May flows into
storage continued a trend so far this year of rising inventory builds: some 1.88
million bpd will have gone into tanks in the first five months of the year,
according to calculations based on official data of crude imports and domestic
output, and refinery processing.
To put that storage number into
perspective, it’s about 300,000 bpd more than Britain’s total pre-coronavirus
crude oil demand. The flows into storage in the first five months of 2019 were
1.21 million bpd. That means they have jumped by about 670,000 bpd in the same
period this year, as China took advantage of the collapse in prices earlier this
year amid a producer price war and the worsening pandemic.
The increase
in storage actually exceeds the rise in imports in the first five months, up by
about 620,000 bpd.
This shows that actual consumption of fuels in China
has been soft in 2020 - unsurprising given the hit to demand in February and
March, when much of the country was under some form of economic lockdown in a
bid to contain the coronavirus.
While the rate of storage did slow in May
compared to the previous four months, it was still higher than in the first five
months of 2019, perhaps illustrating that consumption may not be quite as strong
as suggested by strong headline numbers for crude imports and refinery
processing.
As MRC informed earlier,
China’s daily crude oil throughput rebounded in April from a 15-month low in
March as refiners cranked up operations to meet renewed fuel demand after
lockdowns imposed to prevent the spread of the coronavirus outbreak were
eased. The country processed a total of 53.85 million tonnes of crude oil
last month, data from the National Bureau of Statistics (NBS) showed on Friday,
equivalent to about 13.1 million barrels per day (bpd). That was some 11% higher
than 11.78 million bpd in March.
Ethylene and propylene are feedstocks
for producing PE and PP.
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 383,760 tonnes in the first two month
of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low
density polyethylene (LLDPE) shipments increased due to the increased capacity
utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian
market were 192,760 tonnes in January-February 2020, down by 6% year on year.
Homopolymer PP accounted for the main decrease in imports. |
