London +4420 814 42225
Moscow +7495 543 9194
Kiev +38044 599 2950
info@mrcplast.com

Our Clients

Order Informer

 
Home > News >
 

July crude stocks in China reach record high, dampens Q3 refinery feedstock demand

August 07/2020

MOSCOW (MRC) -- China's crude stockpiles reached a record high level in July as refiners struggle to digest mass crude oil cargoes purchased during the second quarter, while domestic fuel consumption slowed amid widespread flooding across 23 provinces during the month, reported S&P Global.

As a result, the high inventory has dampened China's crude oil demand for delivery in the third quarter as it might take a while to destock, industry officials and market sources said July 29.

Data intelligence firm Kpler said China's crude inventory hit a fresh high of 889.35 million barrels in the week beginning July 20, comparing to 874.84 million barrels in a month ago and 766.21 million barrels in the same week a year ago.

The surge in inventory came as little surprise as Chinese refiners have been aggressively buying crude oil since late first quarter in order to take full advantage of low oil prices.

China's crude oil imports, through both shipping and pipelines, surged 34.4% year on year to hit a record high of 12.99 million b/d in June and this has caused serious port congestion along the Easter provinces, Platts previously reported.

Kpler data showed that China's crude seaborne imports in July hover at about 11.09 million b/d, steady from 11.18 million b/d in June.

Combined with stable domestic crude output at 3.91 million b/d over the first-half of 2020, China's overall crude supplies are set to rise over 16 million b/d in July, according to S&P Global Platts estimates.

Signs of waning Chinese crude oil demand and requirement for Q3 has directly hit price differentials for various OPEC+ export crude grades, as well as the Platts benchmark Dubai price structure.

Chinese refiners' top crude picks, Oman and ESPO Blend grades, have taken a hit recently with price differentials for the Middle Eastern and Russian grades falling to multi-week lows.

The spread between front-month Platts cash Dubai and same-month Dubai swap may also struggle to push above the USD2/b premium threshold in Q3 as Chinese refiners put the brakes on crude procurement activities, trading desk managers in Beijing, Hong Kong, Seoul and Singapore said.

The physical Dubai crude market structure has weakened, with the spread between front-month Platts cash Dubai and same-month Dubai swap averaging 80 cents/b to date in July, down from the June average of 84 cents/b, Platts data showed.

Meanwhile, crude throughput in July remained at a high level after hitting all-time-high of 14.14 million b/d in June, as state-run Sinopec and PetroChina's flagship refineries have resumed operations after their scheduled maintenance.

But the throughput levels are capped as the widespread flooding in about 23 provinces forced refineries, especially those located along the Yangtze river line, to lower their operation rates amid weakening consumer and industrial fuel consumption.

In total, at least 20 state-owned refineries across the country, which have no maintenance plan, have cut run rates in July by 1-17 percentage points from June. These comprise seven refineries under PetroChina, 12 from Sinopec, and Sinochem's only refinery Quanzhou Petrochemical, Platts data showed.

On the other hand, independent refineries' run rates declined about six percentage points from June amid narrowing margins and slowing sales.

Independent and state-owned non-major refineries account for about 31% of China's refining capacity, with the oil giants accounting for about 69%.

In addition, the volume of floating crude cargoes in Chinese waters remains at four times of the levels in normal days, despite easing slightly from the record high, port sources said on July 29.

There were 88.26 million barrels of crude on tankers idled in Chinese waters for seven or more days in the week beginning July 27, edging down from the all-time high of 88.4 million barrels seen in the week beginning June 29, Kpler said on July 29.

This means the volume of new arrivals still exceeds China's port handling capacity, leaving the cargoes to be discharged in August which will sustain China's crude imports and inventory levels in the month.

As MRC reported earlier, Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and SABIC, completed the debottlenecking of its ethylene cracker on 11 July 2020, adding another 30,000 tons/year output to its current capacity. Followed the expansion, the Tianjin based plant become the country's largest compressor unit, producing 1.3 million tons of ethylene annually.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.

Saudi Basic Industries Corporation (Sabic) ranks among the world"s top petrochemical companies. The company is among the world"s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, crude and gaz condensate, homopolymer PP, propylene, HDPE, ethylene, petrochemistry, PetroChina, Sabic, Sinochem, Sinopec, China, Russia.
Category:General News
|
| More

Leave a comment

MRC help

 


 All News   News subscribe