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China resumes storing crude oil inventories in August

September 21/2021

MOSCOW (MRC) -- China resumed adding crude oil to inventories in August after four consecutive months of draws, but this was a reflection of weak refinery processing rather than a bullish demand signal, reported Reuters.

The world's biggest oil importer added about 760,000 barrels per day (bpd) to stockpiles in August, according to calculations based on official data for crude imports, domestic output and refinery throughput.

This partially reverses inventories draws in the prior four months, with about 223,700 bpd leaving in July, about 980,000 bpd in June, 589,000 bpd in May and 280,000 bpd in April.

China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles. But an estimate can be made by deducting the total amount of crude available from imports and domestic output from the amount of crude processed.

Refinery throughput in August was the equivalent of 13.74 million bpd, the lowest since May 2020, at the height of the economic lockdowns imposed to combat the coronavirus pandemic. read more

August's refinery processing was down 2.2% from the same month last year, and 1.2% lower than July's already soft 13.91 million bpd. The total volume of crude available in August was 14.5 million bpd, comprising imports of 10.49 million bpd and domestic output of 4.01 million bpd.

For the first eight months of the year, China appears to have added 270,000 bpd to inventories, including to both commercial stockpiles and the strategic petroleum reserve (SPR). This is a far cry from 1.26 million bpd added to inventories over the whole of 2020, when China snapped up massive volumes of crude after the coronavirus pandemic and a brief price war between top exporters Saudi Arabia and Russia sent benchmark Brent futures to the lowest in two decades.

Brent prices have since recovered amid output restrictions by OPEC+, a grouping of the Organization of the Petroleum Exporting Countries and allied producers such as Russia. Brent futures have surged 372% from a 2020 low of USD15.98 a barrel to end at USD75.46 on Wednesday. But the price rally is a story of producer discipline and recovery in demand in Europe and North America, with China, and indeed much of Asia, sitting on the sidelines amid coronavirus outbreaks and economic disruption.

China's crude imports are down 5.7% in the first eight months of the year compared to the same period in 2020, and this soft trend may continue in coming months.

China has made a major shift in policy as well, announcing its first-ever public sale of crude from its SPR, with around 7.38 million barrels to be auctioned on Sept. 24. The National Food and Strategic Reserves Administration last week said it would release oil reserves to the market in phases to help stabilise prices.

As MRC informed before, China's July daily crude throughput fell to the lowest since May 2020 as independent plants slashed production amid a tighter quotas, high inventories and weakening profits. July processing volumes were 59.06 million tonnes, or 13.9 million barrels per day (bpd), 0.9% below the same month of 2020, data from the National Bureau of Statistics (NBS). That was the first year-on-year decline since March last year when coronavirus hammered Chinese fuel demand, and the July level was down 6% from off June's record at 14.8 million bpd.

And China's crude oil imports rebounded in July from a six-month low as state-backed refiners ramped up output after returning from maintenance, though independent refineries slowed restocking amid probes by Beijing into trading and taxes.

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:PP, PE, crude and gaz condensate, propylene, ethylene, petrochemistry, China.
Category:General News
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