China's independent refineries are projected to see rising availability of bitumen mixtures from Venezuela after the Biden administration announced to re-impose oil sanctions on the country on April 17.
However, most market players believed that Venezuela's total exports will not be affected significantly, but the specific flow of exports, especially the flow to Asia, will gradually return to that before October 2023.
Looking at China's bitumen mixtures imports, OilChem data showed that the port arrivals of bitumen mixtures and heavy oil at ports in Shandong Province and Tianjin City imported by independent refineries and traders totaled 2.91 million tonnes in the first quarter of 2024, a slump of 51% compared with 2023 due to sources flowing to the US and other Asian countries, as well as lackluster demand from domestic bitumen refineries.
Source: Mysteel OilChem
The domestic demand for bitumen mixtures and heavy oil remained poor entering the second quarter.
As of the week ended April 10, the capacity utilization rates of bitumen refineries in Shandong Province averaged 27.9%, a decrease of 3.8 percentage points from 31.7% at the end of March, and a significant fall of 36.5 percentage points year-on-year. This corresponds with the situation of feedstock arrivals.
Source: Mysteel OilChem
In fact, the capacity utilization rates of bitumen refineries in Shandong have been hovering around 30% or even below mainly due to severe losses using bitumen mixtures as the feedstock entering 2024.
Therefore, though the more bitumen mixtures are projected to be re-directed to Asia following the US resuming sanctions on Venezuela, China's actual consumption is still subject to the domestic demand and the profitability.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com