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South Korean and Chinese refiners snap up US Mars crude loading in September

August 19/2021

MOSCOW (MRC) -- South Korean and Chinese refiners have snapped up at least 5 million barrels of US Mars crude loading in September, taking advantage of lower prices in recent weeks, reported Reuters with reference to industry sources.

The purchases could lift in September the volume of US crude loading for Asia, up from a 4-year low in the previous month when strong US crude prices curbed exports, Refinitiv Eikon data showed.

Other grades such as West Texas Intermediate (WTI) and West Texas Light (WTL) that regularly head east are also being booked for Asia, the sources said.

Ongoing production restraint by Middle East producers and a delayed return of Iranian barrels to international markets have also contributed to the rise in Asian buying interest for US high-sulphur crude, they said.

One South Korean refiner has bought 3 million barrels of the sour grade while Unipec, the trading arm of Asia's largest refiner Sinopec, has taken at least 2 million barrels, the sources said.

Unipec has chartered the supertanker Cosnew Lake to load sour crude from Louisiana on Sept. 23, according to two sources and Refinitiv Eikon data. The company is also looking to fix a Suezmax vessel for departure in early September, shipbrokers said. Earlier this week, Taiwanese refiner Formosa Petrochemical Corp had issued a tender to buy Mars crude but did not award it due to high offers.

There are still 2 million to 4 million barrels of Mars crude that have yet to trade and these could potentially come to Asia, said a Singapore-based trader.

"US crude has become quite cheap relative to the rest of the world and U.S. exports have picked up because of it," said Scott Shelton, an energy specialist at United ICAP.

Mars Sour crude's discount to US crude futures widened in late July to the most since April 2020, but has since narrowed due to the rise in export demand, traders said. Mars traded at the smallest discount to benchmark futures in 6 weeks on Tuesday. "We have been seeing sours bid east very aggressively," one U.S.-based source at a top exporter said.

"I think there are still good refinery runs, despite the China COVID noise and SPR stuff," he said, referring to reports about China releasing crude stocks from strategic petroleum reserves (SPR) and concerns about the recent lockdowns in China to curb the coronavirus Delta variant cutting its oil demand.

As MRC wrote earlier, Formosa Plastics Company (FPC), part of Formosa Petrochemical, took off-stream its No. 1 cracker in Mailiao, Taiwan for a scheduled turnaround on 8 June, 2021. This cracker with an annual capacity of 700,000 tons of ethylene and 350,000 tons of propylene is expected to remained shut unitl mid-July, 2021.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
Author:Margaret Volkova
Tags:Asia, Near East, crude and gaz condensate, propylene, ethylene, petrochemistry, Formosa, China, USA, Taiwan.
Category:General News
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