MOSCOW (MRC) -- China's private refiner Shandong Qingyuan Group is working with local authorities to overcome "liquidity pressure" and expects to boost output at a key refinery to as much as 85% of capacity soon, the general manager said, as per Hydrocarbonprocessing.
Qingyuan has been operating its 100,000 barrel-per-day refinery in Linzi, a district under Zibo city, at half of its capacity on average so far this year due to a funding squeeze, Jiao Chong, the general manager told Reuters.
He said Jiuhe Financial Holdings Co Ltd, a government-backed investment firm, which took a stake in Qingyuan in 2015, is helping the group to secure funds that would allow it to operate its refinery at 80% to 85% capacity within 10 days. A syndicate of international banks is also ready to grant Qingyuan a three-year extension on a $955 million loan, a source with direct knowledge of the loan said.
Qingyuan had sought an extension to the loan earlier this year, said four trading and banking sources familiar with the situation. They declined to be identified because the matter was not public. Qingyuan signed the structured three-year loan with commodities trader Trafigura and global banks in September 2019, with lead creditors including the Netherlands' ABN Amro ABNd.ASand ING Group INGA.AS, Australia's Westpac WBC.AX and Japan's Sumitomo Mitsui Banking Corp, according to Refinitiv's Loan Connector.
"Following prolonged negotiations with (a) syndicate of banks, the documentation is ready to be signed, whereby the maturity of the transaction has been extended to 6 years," said one of the sources who has direct knowledge of the loan. "This will allow Qingyuan to continue to operate smoothly in the years to come," the source added.
ABN Amro, ING, Westpac, Sumitomo Mitsui declined to comment. Jiao said he was not in a position to comment on the syndicated loan or the group's broader debt positions. He added that Qingyuan was facing tight liquidity because of investments in upgrading the plant.
As per MRC, Qingyuan, which is based at Linzi in the province of Shandong and operates a 5.2 million-tonne-per-year (104,000-barrel-per-day) refiner, is a regular customer of BP which has expanded its crude oil marketing to Chinese independent refiners over the last three years. Qingyuan has received an annual crude import quota of 4.04 million tonnes and is one of the largest independently-run lubricant producers.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,176,860 tonnes in the first half of 2021, up by 5% year on year. Shipments of exclusively low density polyethylene (LDPE) decreased. At the same time, PP shipments to the Russian market were 727,160 tonnes in the first six months of 2021, up by 31% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased. Supply of statistical copolymers of propylene (PP random copolymers) subsided.
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