China's Sinochem cuts refinery runs, seeks prompt-delivery crude, sources say

Sinochem has cut crude throughput at its only refinery in the southeastern Chinese city of Quanzhou to around 60 percent, four trade sources with knowledge of the matter said, with some saying it is seeking prompt-delivery crude to cover a supply gap in Middle Eastern oil.

Sinochem has also been trying to buy spot cargoes from bonded storage for prompt delivery to cover its “immediate” requirements for the 300,000 barrel-per-day Quanzhou plant, two of the four sources added.

Meanwhile, the refiner also reduced operations at its 1 million ton-per-year steam cracker to about 60 percent, another two of the four sources added. Both the refinery and the cracker had been operating at around 85 percent of capacity.

The Quanzhou refinery has been grappling with a severe disruption in crude oil supply since the US and Israeli war on Iran began on February 28, as the plant relies on the Middle East for 80 percent of its needs, including 70 percent that comes via the Strait of Hormuz, according to tanker trackers.

The plant’s operational crude oil stocks last stood at 10 million barrels, according to estimates by Vortexa Analytics, sufficient to last about 40 days at operating rates that were estimated to be 85 percent before the cuts.

The state firm was among the national oil companies that resumed seeking Russian oil following a temporary US waiver, said two of the sources. The sources cited did not want to be identified publicly because they are not authorised to speak to the media.

Sinochem did not immediately respond to a request for comment.

The refiner completed a full-plant overhaul around the end of January.

Refineries and petrochemical companies, mostly in Asia, have cut runs, shut units or declared force majeure as the US-Israeli war on Iran disrupts crude and feedstock exports from the Middle East.

Reuters