China to Import 335 MT of Naphtha, Wants More
China is set to import more than 335,000 tonnes of naphtha and diesel, rare moves for the world's no. 2 oil consumer given it has been self-sufficient at meeting domestic oil product demand, industry sources said on Friday.
Unipec, the trading arm of top Chinese oil firm Sinopec, has bought more than 300,000 tonnes of naphtha for delivery into China. Traders said the firm rarely buys specifically for China.
State-run Sinochem has bought at least 35,000 tonnes of diesel for October-to-November delivery and could import more, industry sources said.
CNOOC and PetroChina have bought 105,000 tonnes of diesel and could buy more, they said, though volumes could not be confirmed.
China became a net diesel exporter in 2013. It exported between 300,000 to 500,000 tonnes a month between January and August this year, customs data shows. The exports dropped to about 225,000 tonnes in September, the data showed.
Two sources close to the matter said the companies are importing diesel to take advantage of lower oil prices since domestic prices are higher than international ones. Benchmark Brent crude has dropped about 20 percent since the start of the year.
The cargoes could be shipped into bonded storage before being re-exported, a trader said, though this could not be confirmed.
The diesel purchases could help boost the product's Asian margins, which have been weak for most of this year, compared with last year, traders said.
Unipec bought some of the naphtha cargoes through tenders, mostly for delivery to Eastern China. The reasons behind the massive purchases are not known.
It also bought a 55,000-tonne cargo from India's Mangalore Refinery and Petrochemicals on Thursday for early December lifting. But there was no indication if the cargo was destined for China.
"Unipec's volumes are significant, but may not be market changing," said a trader.
The market has been under tremendous pressure since an influx of cargoes from Europe and the Mediterranean, which flipped price differentials into discounts from the premiums that had existed for the first eight months of the year.
Discounts for cargoes delivered to North and Southeast Asia continued to slide deeper. They hit $14 below Japan quotes on a cost-and-freight (C&F) basis on Oct. 24 for cargoes delivered to South Korea, versus a discount of $2 on Aug. 13.
This was despite official Chinese data that showed the country imported nearly 500,000 tonnes of naphtha in September, a record high.
The naphtha cargoes delivered to China last month came from countries including Kuwait, Saudi Arabia, Norway, Thailand, India and the United States.
By Seng Li Peng and Jessica Jaganathan