China port congestion shows no sign of slowing as record imports exert strain

Congestion at China’s east coast oil ports is adding to costs for shippers and importers. Reports say it is likely to run well into August, with crude shipments set to hit another record high this month, according to Refinitiv data.

The 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’s seaborne arrivals into the world’s biggest oil importer are expected to surge to 14.4 million barrels per day (bpd), Refinitiv said, which is well above record imports of 12.9 million bpd in June.

When prices collapsed in April due to multi-decade lows, China snapped up cargoes for delivery in the coming months.

As of 23 July, about 120 million barrels of crude were waiting off Chinese ports to discharge, up from around 80 million barrels in early July.

Commercial crude inventories had already grown to 1.12 billion barrels by the end of June, according to SIA Energy analyst Seng Yick Tee.

Port officials and analysts estimate the pile-up could extend well into August or even into September if traders transfer oil stored on floating tankers to onshore facilities. It could take up to two months to fully discharge floating storage of about 70-80 million barrels.

Elsewhere, Sinopec, Asia’s largest refiner, recently added a combined 1.25 million cubic metres of storage space in Zhejiang province and central Henan province.

For more information visit www.sinopecgroup.com

27th July 2020