China’s independent refiners—typically known as ‘teapots’—imported a combined 2.72 million bpd of crude oil in January, down by 8.7 percent from December, a monthly S&P Global Platts survey of smaller refiners showed on Friday.
The January imports of the independent refiners jumped by 27.7 percent compared to January 2018, but according to a source at the Qingdao port, several vessels originally scheduled to discharge the crude in late December were held up by logistical bottlenecks until January.
The Platts survey from last month showed that the December imports of the independent refiners increased by 5.6 percent from November as the teapots were rushing to utilize their crude oil import quotas allocated by the Chinese state for 2018. Yet the smaller refiners failed to use up the quotas, according to the survey.
For 2019, China issued in early January the first batch of crude import quotas, and they were lower than last year’s first batch. According to analysts, the quotas in the second batch, typically issued around September, could be higher. The basis for the 2019 quotas allocation was the use of the quotas between January and October 2018. During that period, independent refiners had used 71 percent of their quotas, Seng Yick Tee, an analyst with Beijing-based consultancy SIA Energy, told Reuters.
In early January, independent refiners had slowed down purchases for delivery in January and February, because Chinese demand for fuel is generally lower during the Lunar New Year holiday, which this year falls next week.
In recent weeks, however, teapots have started to buy more crude that will arrive in China in March and April, as independent refiners are looking to buy more crude for March and April delivery to restock supplies while oil prices are still relatively low. The buying in recent weeks has pushed up spot premiums for the independent refiners’ favorite crude grades from Russia, Oman, Africa, and Europe to between $0.50 and $1 higher than quotes from early January, according to Reuters' trade sources.
By Tsvetana Paraskova for Oilprice.com
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