China's oil refiners made rare draw on crude stockpiles in April

Chinese refiners dipped into crude oil inventories in April for the first time in 18 months, as high processing rates exceeded the volume of crude available from both imports and domestic output, said Reuters.

Refiners processed 61.1 million tons in April, equivalent to 14.87 million barrels per day (bpd), which was the second-highest on record and followed on from the all-time peak of 14.9 million bpd in March. The volume of crude available to refiners from imports and domestic output in April was 59.71 million tons, equivalent to 14.53 million bpd.

China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.

For April, the total amount of crude available was 340,000 bpd below the volume processed by refiners, the first time since November 2021 that refiners have drawn on inventories.

For the first quarter of 2023 China added about 770,000 bpd to either commercial or strategic storages, a rate that dropped to 480,000 bpd for the first four months as a result of the draw on inventories in April.

The question for the oil market is whether China dipping into stockpiles is the start of a new trend, or whether is was just a one-off driven by temporary factors.

On the processing side, it's clear that China's refiners are running their plants harder, to take advantage of rising domestic demand for fuels as the economy reopens from its COVID-19 lockdowns.

Refiners have also boosted exports of refined fuels having been granted additional quotas by the government as Beijing sought quick ways to boost economic growth and refiners saw opportunities to profit from strong margins for products in the first quarter, especially diesel.

While the domestic demand story remains largely intact, the high levels of product exports may start to taper in coming months for several reasons.

Refiners are likely to hold off exports in order to meet domestic needs, profit margins on refined fuels in Asia have fallen sharply in recent weeks, and Beijing's second round of export quotas are less than half of the first allocation.

Overall, the outlook for refining volumes in China remains strong, with the domestic market recovering and product exports likely to remain solid, even if below the huge volumes seen in the first quarter, when shipments jumped 59.8% from the same period in 2022.

We remnd, India's oil imports from Russia rose to a fresh record high in April, further reducing the share of Middle Eastern and African grades to their lowest level in at least 22 years. Refiners in India, the world's third-biggest oil importer and consumer, are on a Russian oil-buying binge after some countries shunned purchases from Moscow over its invasion of Ukraine in February last year.

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Amcor, a global leader in developing and producing responsible packaging solutions, announced that the Amcor Flexibles manufacturing plant in Londrina, Brazil, is the first Amcor plant in Latin America to achieve International Sustainability and Carbon Certification Plus status, said Polymerupdate.

The certification allows one of Amcor’s largest plants in Latin America to use advanced recycled materials across its product portfolio.

“We are continually exploring ways to increase the use of recycled content in our packaging,” said Ruben Melara, President, Amcor Flexibles Latin America. “The ISCC Plus certification will enable us to deliver advanced recycling materials across Latin America and expand the options for customers seeking more sustainable packaging solutions.”

The achievement also supports Amcor’s commitment to reach 30% recycled content by 2030 and aligns with the company’s sustainability pledge to make all products recyclable, reusable or compostable by 2025.

ISCC PLUS is a standard well-recognized by stakeholders for recycled and bio-based materials. ISCC PLUS certification provides traceability along the supply chain and verifies that companies meet environmental and social standards. For companies using the mass balance approach, ISCC PLUS certification verifies that the mass balance accounting follows predefined and transparent rules.

The technology behind advanced recycling materials allows plastic waste to be converted into brand new products that are no different in quality and performance from ones made with virgin raw materials. This provides customers with the benefit of increasing the use of circular content in their packaging and peace of mind for using a more sustainable solution.

We remind, Amcor plans to shut down its flexible packages plant in Santiago Norte, Chile, on the back of a “difficult industrial and economic” environment. A spokesperson for the company said Amcor’s capsule business in Chile was not affected by the announcement.

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GAIL (India) Ltd, the country's largest gas distributor, reported a 77.5% slump in its quarterly profit on Thursday, dented by weakness in its petrochemicals segment, said Reuters.

The company's standalone profit after tax slumped to 6.04 billion rupees (USD73.86 million) in the quarter ended March 31, from 26.83 billion rupees a year earlier.

The state-owned gas company's revenue from operations rose about 22% to 328.58 billion rupees. Still, its petrochemicals segment saw a 46% drop in sales.

Gail's natural gas marketing segment, which contributes 96% of the total revenue, gained from higher volumes and lower costs, and delivered a 37% jump in quarterly revenue.

The company had agreed to a 20-year purchase deal with Russian energy giant Gazprom (GAZP.MM) in 2012 for annual purchases of about 2.5 million tonnes of liquefied natural gas (LNG).

Gazprom had given up ownership of Germany's Sefe after Western sanctions were imposed on Moscow over its invasion of Ukraine last year.

Last month, Gail reported it would get four cargoes of LNG from Sefe, equivalent to the volumes it was getting under a deal with a former unit of Russia's Gazprom.

The resumption of supplies from Sefe has been crucial for GAIL. The Indian company had seen its profit plunge after Sefe stopped supplying LNG in May last year to meet its own demand.

GAIL continues to battle with increasing expenses, which jumped ~40% to 332.85 billion rupees during the reported quarter.

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Indian Oil Corp., the country's top refiner, said on Friday it is looking to decarbonize its petrochemical feedstocks by introducing bio-naphtha at its crackers, said Hydrocarbonprocessing.

"To attain sustainability, bio-based feedstocks such as bio-naphtha and bio-ethanol are being envisaged as the natural transition for the petrochemical industry," the company's Chairman Shrikant Madhav Vaidya said at Asia Petrochemical Industry Conference, without providing a timeline.

Bio-naphtha is typically obtained from hydro-treatment of used vegetable and cooking oils.

"It is under research and development at our Faridabad facility in northern India... we have kept the used cooking oil pathway open but we're trying to get it via bio-ethanol," the company's executive director of petrochemicals, A. S. Sahney, told Reuters on the sidelines of the event.

We remind, Indian Oil Corporation (IOC) has inked a term agreement with Rosneft to considerably increase oil supplies as well as diversify the grades to India.

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Oil prices dipped as traders warily watched for signs of progress on talks to raise the U.S. debt ceiling, after surging in the previous session on optimism over U.S. fuel demand, said Hydrocarbonprocessing.

Brent crude futures slipped 76 cents, or 1%, to USD76.20 a barrel by 1333 GMT. U.S. West Texas Intermediate crude was down 66 cents, or 0.9%, at USD72.17 a barrel. A sharp plunge in U.S. gasoline inventories due to demand surging to the highest levels since 2021, and optimism surrounding negotiations over the U.S. debt ceiling, helped the main crude benchmarks settle more than USD2 higher.

European equities were up and the U.S. dollar hit a new seven-week peak on Thursday, making oil more expensive for holders of other currencies.

President Joe Biden and top U.S. congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal to raise the federal government's USD31.4-T debt ceiling and avoid an economically catastrophic default.

A debt agreement needs to be reached before the government runs out of money to pay its bills, which could be as soon as June 1.

Also weighing on prices was the increased possibility of another interest rate hike by the U.S. Federal Reserve, which closely watches the number of Americans filing new claims for jobs benefits. Data on Thursday showed they fell more than expected last week, suggesting the labor market remains tight.

Traders are pricing in around a 20% chance the Fed will raise rates at its June meeting, whereas a month ago, traders were pricing in around a 20% chance of a cut.

The strength of April U.S. economic data, in addition to optimism about the debt ceiling negotiations and the health of regional banking stocks overnight have strengthened market expectations of a further hike, ANZ Research said in a note on Thursday.

We remnd, India's oil imports from Russia rose to a fresh record high in April, further reducing the share of Middle Eastern and African grades to their lowest level in at least 22 years. Refiners in India, the world's third-biggest oil importer and consumer, are on a Russian oil-buying binge after some countries shunned purchases from Moscow over its invasion of Ukraine in February last year.

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