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OIL
China’s independent refineries are facing a collapse in refining margins, hit by rising crude prices and weak demand, according to Bloomberg.
- Average margins across products for the Shandong’s Teapots fell by 50% on the year to $54/mt, according to OilChem, the lowest since Nov. 10.
- Teapots may be forced to cut back on production amid a poor start to China’s fuel market.
- Diesel margins have been hit by a wind down in industrial activity as the Chinese New Year holiday period approaches in Feb.
- Independent refineries are about one third of China’s capacity and often rely on discounted sanctioned crude barrels.
- Margins had been supported by flows from Iran and Russia. However, a crack-down on sanctions evading by the US has made it more difficult to acquire those cargoes.
- Teapots may be able to avoid heavier production cuts, having stockpiled crude earlier in the month when crude quotas were released.
Source: Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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