Independent refiners in China’s Shandong province are increasing run rates and crude throughput levels after surviving a period of low demand amid the coronavirus pandemic. However, such uptrend is likely to slow due to logistical constraints caused by severe port congestion in the province.
The congestion is a result of the recent uptrend in China's crude imports as buyers increase procurements on the back of low oil prices. China's crude oil imports surged 19.2% year-on-year to a record high of 47.97 million tons (11.34 million bpd) in May. However, Chinese ports cannot handle the recent flurry of tanker arrivals.
Tanker tracking data showed that as of Wednesday, at least 41 tankers carrying 51.07 million barrels of crude were waiting to discharge at Shandong ports for more than a week. A shipping industry source expected that the queue would likely last until at least August.
Shandong-based independent refineries have increased crude throughputs to an average of 10.9 million tons/month over April-May, an increase of 41.6% from 7.69 million tons/month in January-March and 18.3% higher than 9.2 million tons a year earlier. Chinese refiners have been increasing throughput aggressively thanks to robust domestic refining margins. However, the logistical bottlenecks are likely to put brakes on the increase.
