News Code : 44610

HIGHLIGHTS

About 108.25 mil mt to cover Jun-Dec imports after allocation

Several refineries import, refine more crude than quota volumes

Petrotahlil — China's qualified independent and non-major state-owned refineries are likely to receive their third batch of crude import quotas by the end of June, which would enable those short in quotas to carry out their procurement plans, refinery sources told S&P Global Platts on June 11.

The volume of the third round quota allocation is expected at 25.17 million mt to 17 qualified refineries whose current quota allocations have not met their annual ceiling.

Sources from some of these refineries told S&P Global Platts that they had applied for their remaining quotas in late May and hoped to get them by end-June.

However, the 18th refinery, Baota Petrochemical, which has not been granted any quota this year, is unlikely to be in the allocation list in the third round either as it has not imported crude since early 2018.

With the third round allocation, the qualified refineries would be allowed to refine up to 177.78 million mt of imported crude in 2020.

Over January-May, they have imported about 69.53 million mt of crude, leaving 108.25 million mt, or 15.46 million mt/month, of quotas unused for imports over June-December, according to S&P Global Platts data.

The refineries' monthly crude oil imports have averaged only 13.91 million mt so far this year, despite May imports hitting an all-time high of 18.71 million mt.

Analysts expect the group of refiners' crude imports in June and July at around the same as May volumes then slow down a bit in August.

In China, refineries built and operated by state-owned companies -- Sinopec, PetroChina, CNOOC and Sinochem -- do not need quotas to import crude. All other refineries, including independents and those owned and operated by state-owned companies such as ChemChina and Norinco, require quotas to refine imported crude.

TIGHT QUOTA FOR FEW REFINERIES

Many of the refineries have been short of quotas as their refining capacities are higher than their annual ceiling quota volume, while they lifted their imports recently as crude prices plunged.

The combined annual ceiling quota for the qualified refineries, except Baota Petrochemical, only accounts 76.8% of their refining capacity, at 231.6 million mt/year.

These small-scale qualified refineries ran at 78% of capacity in May, while utilization rate of the integrated Hengli Petrochemical (Dalian) and Zhejiang Petroleum & Chemical has been over 100% since March.

Over June 7-11, at least five refineries with a combined capacity of 20.5 million mt/year said they had imported and processed more crudes than their annual ceiling quota and were anxious for the new allocation.

Meanwhile, feedstock demand is also strong from a few refineries which have not been granted a quota, such as Shangneng Petrochemical and Aoxing Petrochemical in Shandong province.

These refineries usually buy quotas from some of the qualified quota holders.

Recently, price for quota has risen to about Yuan 300/mt ($5.79/b) amid strong demand from around Yuan 100/mt normally, according to refining sources.

"The coming allocation will help to meet these refineries' need to bring in their crudes, quota price will decline a bit then," a Shandong-based refiner said.

Platts

END

 

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