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MOSCOW (MRC) -- China's crude oil
imports are set to slow in the second quarter after Brent prices hit a 13-month
high, cooling demand and capping refiners' margins as they prepare to shut for
planned maintenance, industry sources and analysts said, as per Hydrocarbonprocessing.
Expectations
of a recovery in global fuel demand and tighter oil supplies from Saudi Arabia
and the United States pushed front-month Brent futures to their highest since
January 2020 this week, up around 30% from January. Chinese independent
refiners, who account for a fifth of the country's import demand, have become
reluctant to buy cargoes as they enter a low-demand season, while domestic
margins have yet to catch up with strong gains in international prices, the
sources said.
Easing purchases from China, the world's largest crude
importer, led to a drop in spot prices for Middle East and Russian grades this
week, while prices of crude from other regions such as Africa and South America
have also weakened. "Demand is very slow now and there are many available
cargoes to choose from," said a source at a Chinese refinery, adding that high
oil prices have cooled buying interest. "The lack of substantial demand, plus
strong backwardation, put a lot of pressure on traders," said a source with an
Asian refiner, noting an increasing number of unsold cargoes due to arrive in
Asia in March and April.
The sources declined to be named due to company
policies. Iraq's Basra Light crude and Upper Zakum from the United Arab Emirates
have dropped to discounts against their official selling prices (OSPs) in spot
purchases by Chinese refiner Hengli Petrochemical, traders said. Companies
typically do not comment on their trades. More than 10 Chinese independent
refiners, including one operated by Zhenghe Petrochemical, a subsidiary of
ChemChina, and Shandong Qicheng Petroleum Chemical's plant, will shut for
maintenance between March and June, according to Chinese consultancy JLC.
Capacity at both plants are at 5 million tonnes per year (tpy).
The run
rate at independent refineries is expected to fall below 70% in April, from
around 74% presently, JLC analyst Zhou Guoxia said.
As MRC informed before,
earlier this week, ExxonMobil Corp said it will close its 72-year-old Altona
refinery in Australia, the country’s smallest, and convert it to a fuel import
terminal as refiners struggle with low demand.
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 2,220,640 tonnes in 2020, up by 2%
year on year. Only shipments of low density polyethylene (LDPE) and high density
polyethylene (HDPE) increased. |
