Crude Oil Ships Waiting near China Ports

According to SCI SHIPPING SMART (http://ship.sci99.com/), more crude oil ships are at anchor near China’s main ports. It was usual that around 10 ships waited for discharge near the ports in Shandong Province. But now the number is around 20. The last time that many oil tankers delayed discharge was in early 2016, and the discharge dates at some oil tankers were delayed for 20-30 days. 

There are several reasons for the current oil discharge delay. First, some state-owned refineries and independent refineries are under units’ maintenance, which weighs down the crude oil demand. According to SCI, the average operating rate of CDUs at Shandong independent refineries was 65.89% on March 28, down 3% from the beginning of March. The average operating rate of CDUs at state-owned refineries was 78.69% on March 29, down 3.45% from the end of February.

Second, some countries are active in exporting crude oil to China, especially West African countries. The crude oil that is waiting for discharge is mainly from Angola, Republic of Congo, and Equatorial Guinea. In the meantime, some other cargoes are from Brazil, U.K. and the Middle East.

Third, the crude oil storage capacity at main ports in Shandong Province is not at a high level. In addition, Qing Port and Rizhao Port are chosen as the crude oil futures delivery warehouses. China’s crude oil futures will take up some storage capacity at the ports.

Fourth, the utilization of Shandong ports is not balanced, Qingdao Port, Rizhao Port and Yantai Port are very busy, while some smaller ports are running at low utilization rates. Fifth, the heavy fog at the estuary of the Yangtze River is impacting the shipping severely.

But these factors don’t mean China’s crude oil demand is slipping. China’s crude oil non-state trade quota is around 142 million mt in 2018, and Shandong independent refineries take up a large proportion of the quota. Therefore, the crude oil import volume in China will increase stably in the future.

In the meantime, Shandong Bohai Bay Port Group was founded on March 28. The new group will promote the development and upgrade of the ports in Shandong Province. Finally, as of 2022, a total of around 200 million mt/a of oil refining capacity will be added in China. But China’s crude oil output will not increase a lot. Accordingly, China will need more imported crude oil.