Page 6 - AsianOil Week 28

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Margins pressing China’s independent refiners
PERFORMANCE
CHINA’S independent re ners are reportedly set to wind down run rates during the third quarter owing to depressed gross re ning mar- gins (GRMs).
Margins have come under pressure from extensive fuel stockpiles and rising feedstock costs, Bloomberg quoted analysts and unnamed traders as saying last week. Brent is currently trading in a $40-45 per barrel range, a signi - cant improvement on the more than 20-year low recorded a er prices collapsed in early-March. Brent slipped below $16 in April, while West Texas Intermediate (WTI) even managed to trade – albeit brie y – at negative prices.
Bloomberg noted that China’s independent re neries, or teapots, also had a backlog of crude imports waiting to be processed by the port of Qingdao in Shandong Province, which is home to the majority of the country’s teapots.
Shandong independents will cut runs from May highs of 2.3mn barrels per day to 1.9-2mn bpd in July and August, industry consultant FGE said. Traders told the newswire that some plants in the cities of Dongying and Weifang were likely to lead the charge in ramping down operations.
Energy Aspects analyst Yuntao Liu warned that stronger oil prices had wiped out the bene ts re ners received from the central government’s oil price oor, which was set at $40 in January 2016.
e policy was implemented to protect domestic production, following a similar oil price collapse 2014 that sent Brent into a tailspin.
Liu added: “[S]ince majors are looking to raise runs a er seasonal maintenance, teapots are facing big challenges.”
While Energy Aspects and FGE use di er- ent methods of calculating the teapots’ GRMs, both sets of numbers show the independent sector to be under enormous pressure. Energy Aspects said margins had fallen from CNY1,243 yuan ($177.6) per tonne in late April to negative CNY383 ($54.73) at the end of June, while FGE said margins had dropped from $20 in April to less than $5 per barrel.™
China’s oil imports set new record in June
PERFORMANCE
CHINA’S oil imports reached an all-time high of 53.18mn tonnes (12.99mn barrels per day) in June, according to General Administration of Customs (GAC) data released on July 14.
e record-setting month helped li the country’s crude purchases in the first half by 9.9% year on year to 268.75mn tonnes (10.82mn bpd).
Reuters reported that crude storage facil- ities at the country’s major ports were close to full and that congestion caused by the record arrivals was expected this month. The newswire cited shipping data from Ref- initiv Eikon as showing that there were 37 tankers queued around Shandong Province as of July 13, with another moored 24 off Zhoushan Port.
Bloomberg quoted unnamed traders last week as saying that China’s independent re n- eries, which are mostly located in Shandong, had a backlog of crude imports waiting to be processed. is, they said, could lead to cuts in re nery throughput until excess stockpiles have been run down.
Reuters quoted unnamed analysts as saying that China’s crude imports would slow in the third quarter as recovering oil prices curb re n- eries’ appetite.
Refinery runs climbed 9% year on year in June to 57.87mn tonnes (14.14mn bpd) of crude, according to National Bureau of Statistics (NBS) data released on July 16. is set a new monthly record, surpassing May’s 57.9mn tonnes (13.69mn barrels) which was up 8.2% on the year.
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w w w . N E W S B A S E . c o m Week 28 16•July•2020