Mega-Refiner Buying Oil a Bright Spot for Constrained Market

frank lamjus

(Bloomberg) — A Chinese mega-refiner is snapping up barrels of Middle Eastern crude in a rare bright spot for a market hampered by dwindling import quotas after a buying spree earlier in the year. Load Error Rongsheng Petrochemical Co.’s Singapore unit has purchased at least 7 million barrels in the […]

(Bloomberg) — A Chinese mega-refiner is snapping up barrels of Middle Eastern crude in a rare bright spot for a market hampered by dwindling import quotas after a buying spree earlier in the year.

Loading...

Load Error

Rongsheng Petrochemical Co.’s Singapore unit has purchased at least 7 million barrels in the spot market so far this month for delivery in December and January, according to traders who asked not to be identified because the information is private. The company is buying up crude to feed a trial run operation of its expanded refinery in Zhejiang province this quarter.

Chinese crude imports rose in September for the first time in three months as companies sought oil for new and expanding plants. Inbound shipments may struggle to reach June’s peak through the rest of the year after independent refiners used up most of their quotas. The processors, known as teapots, played an outsized role in supporting oil prices this year after a buying frenzy following a rapid recovery from the pandemic.



chart: China's oil imports last month were at the highest level since July


© Bloomberg
China’s oil imports last month were at the highest level since July

Rongsheng’ Singapore unit purchased medium-sour grades from the Persian Gulf — the baseload for its refinery — such as Abu Dhabi’s Upper Zakum, Qatar’s Al-Shaheen and Iraq’s Basrah Light cargoes, according to the traders. The phase 2 expansion of its Zhoushan-based refinery is expected to double processing capacity to 800,000 barrels a day.

Rongsheng Petrochemical didn’t immediately respond to an email seeking comment on the matter.

Teapots are expected to ramp up crude purchases for January-arrival, traders said, with some companies already showing interest for spot purchases.

Beijing started allowing teapots to directly import crude in 2015 as part of an effort to increase private investment in the energy industry. The independent refiners, mainly based in Shandong province, have been using light-cycle oil and diluted bitumen as alternatives to crude after running short of quota.

(Updates with chart.)

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

Continue Reading

Source Article

Next Post

What is meant by the stock market?

The stock market is also known as the equity market and share market. It is the aggregation of the buyers and sellers of the stocks that will represent the ownership claims on the business.  What are the types of the financial intermediaries in the stock market? A number of the corporate entities […]