MOSCOW (MRC) -- Plagued by high crude stockpiles and weak margins, Chinese independent refiners have curtailed buying cargoes in the September-loading cycle, impacting differentials for several China-focused grades in the region, said S&P Global.
Chinese refiners' top crude picks, including Oman and Russia's ESPO Blend grades, have taken a hit in recent days amid tepid buying appetite from teapots, another name for China's independent refineries.
"The Chinese market is still flooded with supply, inventories are still high and refining margins are still weak," a source from a Chinese trading house said.
Reflecting a weaker Oman market, the cash Oman-Dubai spread has trended narrower this year, data from S&P Global Platts showed. The spread averaged 13 cents/b in July so far, compared with 14 cents/b over the second quarter, and 34 cents/b over the first quarter, the data showed.
ESPO blend crude differentials have also narrowed to lows seen two months earlier. The spot differential of ESPO M1 to Dubai was assessed 5 cents/b lower day on day at USD1.45/b at the Asia close on July 21, and was last narrower at USD1/b on May 18, the data showed.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.