Congestion at China’s east coast oil ports that is adding to costs for shippers and importers is likely to run well into August, with crude shipments set to hit another record high this month, according to analysts and Refinitiv data, Reuters said in a July 23 report.
Chinese independent refiners had snapped up rare crude grades from the North Sea and Guyana at low prices earlier this year in an oversupplied market after the coronavirus pandemic destroyed demand.
The North Sea grades that were purchased included Balder, Flotta and Chestnut crude, while Guyana’s Liza crude was sold into China for the first time.
Reuters, in its report on Thursday, said the massive inflows are straining offloading facilities, while refiners and port operators in Shandong province — home to a quarter of China’s refining capacity — are rushing to build new storage tanks.
July seaborne arrivals into the world’s biggest oil importer are expected to surge to 14.4 million barrels per day, Refinitiv analyst Emma Li said, well above record imports of 12.9 million bpd in June.
China waded into oil markets in April when prices collapsed to multi-decade lows, snapping up cargoes for delivery in coming months.
As of July 23, about 120 million barrels of crude were waiting off Chinese ports to discharge, up from around 80 million barrels in early July, Refinitiv data showed.
Commercial crude inventories had already grown to 1.12 billion barrels by end-June, said SIA Energy analyst Seng Yick Tee, enough oil to operate China’s refineries at 2019 utilization levels for nearly three months.