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Asia crude oil imports stay soft in September

October 14/2021

MOSCOW (MRC) -- Despite a rally in crude oil prices to three-year highs, there is scant evidence that demand in the top importing region of Asia is recovering. In fact, imports across the region dropped in September from the previous month, as high prices and economic disruption from the coronavirus pandemic continued to affect fuel demand, reported Reuters.

What there is early evidence of is that the major producers in the OPEC+ group of exporters are re-gaining market share lost due to their earlier output cuts, as they ramp up production and cut their official selling prices.

Asia's crude imports were 22.99 MM barrels per day (bpd) in September, according to Refinitiv Oil Research, down from 23.24 MMbpd in August and only just above July's 22.61 MMbpd.

China, the world's biggest crude importer, brought in 9.6 MMbpd last month, down from August's 10.53 MMbpd, according to Refinitiv's vessel-tracking and port data.

The softness in September imports are most likely a reflection of the high official selling prices (OSPs) for Middle Eastern grades that prevailed at the time when September-arriving cargoes would have been arranged. Also, a lack of available crude import and product export quotas may have constrained buying by China's independent refiners, who account for about one-third of its oil demand.

September arrivals would have been booked around June and July, and it's worth noting that since then the major Middle East exporters have moved to cut their OSPs, as well as boost output in line with an agreement by the OPEC+ group to add back 400,000 bpd every month from August to December.

Saudi Arabia, the world's biggest crude exporter, lowered its OSP for its benchmark Arab Light grade to Asian customers for November-loading cargoes by 40 cents a barrel (bbl), to a premium of USD1.30 a bbl to regional benchmark, the Oman/Dubai average. It was the second consecutive month the OSP was cut, and the premium for Arab Light has now dropped by USD2.60 a bbl in the past two months, having been set at USD3 a bbl for September-loading cargoes.

This reduction in the Saudi OSP, which has been largely matched by other key Middle Eastern exporters such as Kuwait and Iraq, was followed by news that Saudi Aramco, the state-controlled oil giant, will supply additional crude to at least three Asian buyers in November, while meeting full contracted volumes for four others. It seems that Aramco is keen to keep its oil competitive in Asia with a combination of lower prices and increased supply, working to take market share amid stagnant overall demand in the region.

We remind that As MRC wrote before, Mukesh Ambani, chairman and managing director of Reliance Industries Ltd (RIL), said in June 2021 that he expects the company's deal with Saudi Aramco to materialise this year. RIL had in 2019 announced its interest to sell 20% stake in the companys flagship chemicals and refining business to Saudi Aramco in a deal valued at USD15 billion. Last fiscal, RIL carved out its oil-to-chemicals business into a separate entity, to facilitate on boarding of strategic partners like Aramco.

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 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.
Author:Margaret Volkova
Tags:Asia, Near East, crude and gaz condensate, propylene, ethylene, petrochemistry, Reliance Industries, Saudi Aramco, India, Saudi Arabia.
Category:General News
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