Business hub – international reports
Independent refineries’ imports of Russian oil amounted to about two million metric tons in April, in light of the turmoil in energy markets and high oil and gas prices. China – especially its independent refineries – knows that cheap Russian oil presents a good opportunity to secure supplies.
After being careful for some time, Independent refineries in China are becoming more convinced of buying cheap Russian oil as it becomes clearer that the conflict in Ukraine will not result in major disruptions to the flow of shipments or financial transactions. Unless penalties are imposed.
The easing of restrictions imposed by the epidemic in Shandong Province prompted, Signs of improvement in refining margins lead independent refineries in China to purchase Russian shipments without hesitation, To avoid missing the opportunity available to it and to make up for the losses it incurred during the past few months.
The increases of imports of cheap Russian oil
After declining inflows for the month of March, China’s independent refineries imports of Russian oil rebounded by 35.7% year on year, to reach 2 million metric tons in April, According to Standard & Poor’s Global Commodity Insights data on Monday, May 9th.
Although state-owned refineries are buying Russian shipments with caution amidst the payment and shipping uncertainty, Independent refineries are willing to take the risk of securing cheap spot oil imports from Russia, Including the ore of Espoo and the Urals.
Challenges threatening Russian oil exports to Asia
These independent refineries bought shipments for the months of May and June, In addition to Ural ore, These shipments are on a delivery on board basis at the port of discharge (DES); This reduces risk compared to FOB deals.
During the month of April, Independent refineries imported about 2.04 million tons of Russian oil, Most of it was Espoo crude and fuel oil.
The number of Espo crude shipments that arrived in Shandong Province reached 19, an increase of 26.7%, Compared with 15 shipments in March, ChemChina was among the buyers, and lignin petrochemicals, And Dongming Petrochemical.
ChemChina’s shipments of Espo crude increased in April, Compared to March, Huaxing Petrochemical Company resumed purchasing after scheduled maintenance work. As for Changi Petrochemical Company, it is still undergoing maintenance operations. But it is expected to meet its needs of Espo crude for the month of May.
Although Russian imports rebounded last month, The cumulative imports of independent refineries from Russia decreased during the first 4 months of this year by 23.6% year on year, to 7.89 million metric tons.
The decline in Russian flows to the independent refining sector is in line with the overall decrease in flows from all suppliers of 15.9% year-on-year, to 54.4 million tons during the same period.
Industry analysts expect that signs of improvement in refining margins will contribute to an increase in demand for raw materials in the short term. After the easing of epidemic-related restrictions in the Shandong region.
And the local industry consulting company “JLC” expected that the average operating rates will be higher during the month of May, With more refineries restarting after maintenance at the end of the month, In addition to improving margins.
According to the company, The average monthly operating rate in 40 independent refineries was about 51.4% in April, down 3% from March, compared to an operating average of 74.3% in April 2021.
Malaysia is in the lead. Saudi Arabia is retreating
On the other side, Malaysia remains the leading supplier in April, overtaking Russia and Saudi Arabia. Despite the decrease in flows by 31.9% per month to about 2.14 million metric tons.
However Imports from Malaysia increased by 4.1% year on year, To 9.7 million metric tons during the period from January, the second to April.
Imports from Malaysia included, Mal and Nemina blend – an Iranian crude – in addition to bitumen blend, Iranian shipments continue to flow to independent refineries, Iranian oil is exported to China as coming from other countries; Among them are Oman, UAE and Malaysia.
The total imported crude amounted to about 2.26 million metric tons in April. A decrease of 24.8% at 3 million metric tons during the month of March.
While imports of bitumen mix, along with Iranian crude, amounted to about 3.23 million metric tons, That is, nearly half of the raw materials imported by China’s independent sector in the Shandong region during April, According to data from S&P Global Platts.
This led to Saudi Arabia’s regression position to become the third largest supplier of Chinese independent refineries in April with flows of 1.6 million metric tons.
Iranian oil exports to China slump against cheap Russian crude
Imports from Saudi Arabia decreased by 23.5% on a monthly basis. and 30.6% on an annual basis, This is due to the reduction in imports from Hengli Petrochemical Refinery in April; due to poor margins, The decline in Hengli refinery imports led to a decrease in flows from Saudi Arabia by 8% on an annual basis. at 7.56 million metric tons, It is slightly lower compared to Russia, Which was the second largest supplier to China last month.