Russian M100 Fuel Oil Demand Falls As Chinese Teapot Refiners Turn To Residual, Wax Oil

Demand for Russian M100 fuel oil -- a major cracking feedstock at "teapot" refineries in eastern China's Shandong province -- remained thin this week, as refiners turn to residual oil and wax oil as alternatives, market sources said Wednesday.

"There is more residual oil and wax oil available in the domestic market, which can also be used as feedstock for FCC (fluid catalytic cracking) units, while M100 is more expensive," said a source with the 3.5 million mt/year (70,000 b/d) Jingbo Petrochemical refinery.

The company this week has been reselling its 75,000 mt cargo of M100 that landed last month. It has so far sold 20,000 mt from the cargo at around Yuan 5,950/mt on a CFR basis and is still offering at the same level this week.

A Singapore-based trader offered a MR-sized Russian M100 cargo for May delivery at a premium of $105/mt to the Mean of Platts Singapore 180 CST high sulfur fuel oil assessments on a CFR basis -- the same level it offered at in the previous week.

Last year, teapot refineries in Shandong ran a total 4 million-5 million mt of Sinopec's Shengli crude. The volume is expected higher this year, as Sinopec's refineries are not running as much domestic crude as they did last year, said a source from Chinaoil.

Adding to this, more domestic crude grades have been made available to teapot refiners this year. The extra supply came from oil fields such as Sinopec's Tahe and Zhongyuan, and PetroChina's Liaohe, the Jingbo source said

The company has a monthly term supply of 165,000 mt of M100 from Russia's Rosneft through BP, with the term period running from November 2013-December 2014.

(ca-news.org Edited by Topco)