Crude oil imports for China's independent refineries fell for the second consecutive month in February to 9.75 million mt, or 2.55 million b/d, after hitting an historical high of 12.6 million mt in December, a monthly survey by S&P Global Platts showed Tuesday.
The February total was down a sharp 15.3% from January, but still 24.7% higher than a year earlier.
The month-on-month fall was due mainly to negative refining margins carried forward from end November and high stocks accumulated through heavy inflows over November-January.
Crude imports by the independent sector surpassed 11.5 million mt to total 36 million mt over November 2018-January 2019, pushing up inventories at both refineries and ports.
Refining margins remained negative over the same period, discouraging refiners from bringing in more barrels in February.
"Crude imports in March are likely to stay flat or slightly higher than February levels as many refineries have already cut daily throughput due to the bad margins," a market source said.
Platts survey covers barrels imported for 38 refineries with quotas, and others without quotas, through ports mostly in Shandong province and Tianjin.
These refiners were awarded a combined 72.21 million mt in the first batch of quota allocations for 2019, accounting for 85.9% of the county's total allocation for independent refineries in the batch.
The barrels include those imported directly by refiners and trading companies that will be used by the independent sector.
Only cargoes discharged over the month -- including those that arrived in previous months -- were counted as imports for the month.
TOP FIVE BUYERS RECEIVE 44% OF TOTAL
Dongming, Hongrun, ChemChina, Tianhong and PetroChina were the top five buyers in February, receiving a combined 4.27 million mt, or 43.7% of the total imports in the month.
ChemChina, usually the top buyer, was surpassed by Dongming and Hongrun in February, likely due to a reduction in imports in advance of scheduled maintenance at several of its refineries in the coming months.
Dongming was the biggest importer in the month at 1.21 million mt, up 52.6% on month, while imports by Hongrun surged 152.4% over the same period to 1.04 million mt.
Hongrun also imported the most grades in February -- nine -- some of which arrived in Shandong for the first time.
A total of 23 independent refiners and six trading companies imported around 33 grades of crudes from 21 countries in February, compared with 33 buyers importing 36 grades from 19 countries in January.
Some of the imported crude grades are unlikely to be processed by their importers, as some typically import more than they can digest, according to market sources.
HAIYOU RECEIVES CRUDE
Haiyou Petrochemical plans to restart its 3.5 million mt/year crude distillation unit around May/June that has been shut since last May. It imported crude in February both in preparation for the restart and for resale.
Some independent refineries in Shandong, which had low quota allocations in the first batch, have started to face shortages.
Chengda Petrochemical, also known as Yongxin Petrochemical, has had to put some of its imports into bonded storage tanks at Yantai port due to a lack of quotas. It has imported around 409,000 mt of crude to date in 2019, against a quota of just 190,000 mt in the first batch.
In addition, Hualian Petrochemical imported around 810,000 mt of crudes over January-February, against a quota of 640,000 mt for the first batch.
Dalian Hengli Petrochemical in northeastern Liaoning province did not import any crude in February or January, as it still had sufficient supply from last year's imports.
