CHINA DATA: Shandong independent refiners' March feedstock imports hit 7-month high

China's independent refineries ramped up feedstock imports by 13.3% on the month to a seven-month high 17.4 million mt (127.54 million barrels) in March, the highest since August when it was at 18.23 million mt, S&P Global Commodity Insights data showed April 9.

On a barrel-per-day basis, the imports were up by 6% from February at a six-month high of 4.11 million b/d in March, according to the data.

The bulk of the increase came from the three mega refineries, which raised their combined feedstock imports by 24.6% to 6.575 million mt last month, partly compensating for the 12-month low of 5.28 million mt in February, S&P Global data showed.

This came despite two of these three refineries scheduling maintenance from April.

Zhejiang Petroleum & Chemical has shut one crude distillation unit with a capacity of around 200,000 b/d in early April for scheduled maintenance, according to a company source.

Its peer Hengli Petrochemical (Dalian) Refinery will shut one of its 200,000 b/d CDUs later this month, according to market sources.

Hengli Petrochemical (Dalian) Refinery could not be immediately reached for comment.

"Demand for both petrochemical and oil products has been weak in early April, so they might want to take this chance for maintenance," said a refinery source.

Feedstock imports by Hengli were up by 44.6% on the month at 1.6 million mt in March, compared with 1.11 million mt a month earlier, S&P Global data showed.

Meanwhile, ZPC increased its feedstock imports by 39.5% on the month to 3.89 million mt, according to the data.

Crude imports up by 15% on month

The feedstock imports for independent refineries in March included crude, fuel oil and bitumen blend.

Crude imports increased by 14.7% on the month to 15.06 million mt in March, with most incremental volumes going to complex refineries that mainly import crude as feedstock.

Meanwhile, small-sized independent refineries continued to import fuel oil and bitumen blend as feedstock in the face of tight crude import quotas for the year.

Combined fuel oil and bitumen blend imports were up 5% from February at 2.33 million mt last month, S&P Global data showed.

The rise was mainly due to strong demand for fuel oil, imports of which increased by 21.5% on the month to 1.83 million mt in March, according to the data.

Fuel oil can be mixed with crude oil to be fed into CDUs for cracking, as a way to save the crude feedstock, sources said.

April imports to fall slightly

Looking ahead, April imports are likely to come down slightly from March levels, given the low utilization rate at Shandong's independent refineries, as well as the maintenances at mega refineries.

The average utilization rate at Shandong's independent refineries remained low at around 58.6% as of April 3, largely stable from a week earlier, data from local information provider JLC showed.

Trade sources said refining margins have been weak and at least four refineries plan to shut for maintenance, which will cap their demand for feedstock.

"The sales of both gasoil and gasoline have come down slightly after the Tomb Sweeping holiday in early April, and will likely improve again only before the May Day holiday in early May," an independent refinery source said.

Another analyst said April feedstock imports were likely to retreat slightly, as it might take some time for independent refineries to consume March imports.

FEEDSTOCK IMPORTS FOR INDEPENDENT REFINERS ('000 MT)

Note: Total includes imports for unknown recipients

Source: S&P Global Commodity Insights