The port congestion in China’s key refining hub of Shandong is potentially being aggravated by the delay in the opening of a new oil tanker berth at Dongjiakou port close to the major port of Qingdao.
Initially, the 2 million barrel very large crude carrier (VLCC) Dongjiakou berth was planned to open on August 2. However, the start of operations is delayed by problems with approvals until at least September. The details are still unclear.
At the moment, Qingdao is still flooded by vessels waiting to unload crude. There is only a slim prospect that the backlogs would ease until at least late August as earlier this year, Chinese refiners boosted crude imports as prices crashed. Crude imports reached a record high of 12.94 million barrels in June and being constrained by the limit of import infrastructure. The limited storage capacity has also restricting buyers to take more crude.
Looking ahead, the Qingdao port is scheduled to open a new 12.6 million barrel crude tank farm at Dongjiakou in August despite the postponed new VLCC berth, to boost speed tanker unloading. However, the opening of the new facilities is seen to not be able to overcome the major bottleneck of limited pipeline capacity.
In the coming months, a shortage of import quotas, along with the slumping demand in China’s central and southern regions, would likely push crude imports back.
