The severe congestion at China’s east coast oil ports is expected to prolong into August, port officials and analysts said, as tanker tracking data shows crude shipments to hit a new record high in July. The tanker tracking data suggest that tankers are waiting to discharge about 120 million barrels of oil at Chinese ports as of July 23, compared to around 80 million barrels at the start of the month.
According to the data, about 14.4 million bpd of crude is expected to arrive at Chinese ports this month, increasing from 12.9 million bpd in June. These higher oil inflows were caused by a collapse in oil prices that encouraged Chinese importers to go into a buying spree in April. The higher imports also boosted China’s commercial crude stocks to 1.12 billion barrels by end-June.
At the same time, Chinese refiners are lowering their throughput amid weakening margins and stalled fuel demand which caused a build in their oil product stockpiles. Shandong independent refiners operate at an average of 74% utilization rate this week, falling from 76% last month. Traders said that these refiners had already significantly reduced crude purchases for August and September deliveries.
Reuters reported that Chinese refiners are rushing to construct new storage tanks to help to ease the port congestion. State refiner Sinopec recently added new storage spaces in the province of Zhejiang and Heinan with a combined capacity of 1.25 Mcm. In Shandong province, at least nine planned crude oil storage projects are expected to add 13.66 Mcm storage capacity this year.
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Published on July 24, 2020 3:17 PM (GMT+8)Last Updated on July 24, 2020 3:17 PM (GMT+8)
