Having offered a tariff exemption on imports of US crude, China has yet to begin any buying spree of American oil. Instead, the country’s largest oil trading house is supplying Hawaii.
According to fixture data, Wah Kwong Maritime Transport’s 113,200-dwt Victory Venture (built 2017), operating in Navig8’s V8 pool, was fixed by Unipec to lift from Vietnam at Worldscale 97.5.
The 80,000 tonnes of Su Tu Den and Bach Ho crude is due to be lifted on 1-3 March on a voyage charter to Barbers Point in Hawaii. Par Hawaii, the state’s only refiner, has a daily crude processing capacity of 148,000 barrels.
According to the Energy Information Administration, the US has not imported any Vietnamese crude since April 2018 on a nationwide basis.
The last Vietnamese crude shipment to Hawaii was recorded in October 2016, according to IHS Markit.
“The Par refinery in Hawaii has recently been buying to replace Libyan barrels,” IHS Markit’s liquid bulk principle analyst Fotios Katsoulas said.
“Unipec has term Vietnam cargoes that cannot be easily absorbed due to the decline in the country’s demand for crude oil in parallel to the coronavirus outbreak.”
Estimates of consultancy Facts Global Energy (FGE) suggested the epidemic would lower Chinese oil demand by 2.5m barrels per day (bpd) this month, while March would see a 1.4m-bpd loss.
Sinopec, China’s largest refiner that owns Unipec, is cutting crude runs by 600,000 bpd in February. The state giant has also planned to bring forward the maintenance of 1.4m-bpd refining capacity to mid-March, FGE noted.
Having secured large quantities of crude from overseas producers for its parent group’s requirement, Unipec has been in need of re-selling those cargoes to other consuming nations, according to media reports.
An email seeking comment from Sinopec has not been responded to at the time of writing.
More US crude sales to China
On 18 February, the Chinese government announced tariff exemptions will be handed out from 2 March on imports of nearly 700 US productions, including crude.
As Beijing has committed to buying $18.5bn worth of energy products as part of a US-China trade deal, tanker owners and analysts have predicted the policy may support tonne-mile demand for tankers, especially for VLCCs.
“As overall crude exports from the US is expected to surge further this year, a major chunk of the incremental flows will head to China once the latter’s refinery runs starts gathering momentum after the coronavirus shock,” Drewry’s lead tanker analyst Rajesh Verma said.
However, it remains far from certain when China will start to lift more US crude, with the impact of coronavirus expected to last well into the second quarter.
“Most likely, the Coronavirus will be used by China as a get-out clause to walk away from some of the import commitments to the US,” Banchero Costa’s research head Ralph Leszczynski said.
