Crude oil stocks at major ports in eastern China's Shandong province had risen to a 13-month high because of heavy maintenance at independent refineries and high crude imports in the previous months, port sources told S&P Global Platts Thursday.
Discharge operations at the ports however, were not affected, they added.
Total crude inventory at the major ports of Qingdao, Longkou, Laizhou and Rizhao in Shandong rose 10% from mid-April to around 2 million mt as of May 11, the highest since April 2016, according to JLC data. JLC is a Beijing-based energy information provider formerly known as JYD.
And at Qingdao port, stocks have been hovering at relatively high levels of around 750,000-800,000 mt in recent weeks -- slightly above the average level of 700,000 mt over January-April.
A source at Qingdao port attributed the build in stocks to several independent refineries deferring moving crude from the port to their facilities in recent weeks, as they are facing ullage issues at their own crude storage tanks during turnarounds.
A total 12.8 million mt/year (256,000 b/d) of independent refining capacity had been shut for maintenance in May, up 41% from 9.1 million mt/year last month, according to Platts calculations.
Wantong Petrochemical's 4.3 million mt/year refinery was shut on April 28 for a month-long maintenance until end-May, while the 3.5 million mt/year Lijin refinery was shut on May 3 for a turnaround lasting one month. The 5 million mt/year Lianhe Petrochemical will restart in end-May from an ongoing maintenance that started in end-April.
With those plants undergoing full turnarounds, crude consumption is estimated to have been cut by about 1 million mt this month, according to sources.
Adding to a heavy turnaround program, high crude imports over the past months have also contributed to the build in crude stocks at the ports, according to sources.
Crude imports by Shandong independent refineries came at 8.3 million mt in April, down 17% from a record high of 10 million mt in March, a separate Platts monthly survey showed.
Despite the month-on-month drop, April crude imports were still the second highest level seen since Platts started tracking independent refinery imports in January 2016.
And imports are likely to fall further in May, as fewer crude cargoes have called at the berths this month, given that a few independent refineries are running low on import quotas.
CRUDE DISCHARGE OPERATIONS NOT AFFECTED
Meanwhile, crude discharge operations at the ports have not been affected by the high port stocks, according to sources at Qingdao and Laizhou ports.
Currently, Qingdao port is not facing any congestion and it takes about a week for a cargo to be discharged, which is the normal timing, said the Qingdao source.
Sources at Laizhou port also confirmed that there is no congestion, simply because fewer cargoes have arrived in the first half of the month.
A total 300,000 mt of crude have been discharged in the first half of May, falling nearly 29% from around 420,000 mt in the first half of April, according to the source.
No vessels were waiting outside Laizhou port as of Thursday. In contrast, three to four 100,000-mt vessels have waited outside port limits each day at its peak.
At Qingdao port, around six vessels were waiting to discharge on Thursday. This compares to a peak of around 15 vessels last year due to logistic issues.
