Jan 2, 2025
In December, Russian ESPO blend crude oil loadings increased month-over-month to reach a record high, with one shipment sent to India.
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In December, Russian ESPO blend crude loadings from Kozmino port increased to 41 vessels, up from 36 in November, likely marking a record high for monthly loadings of this grade, according to data from S&P Global Commodities at Sea, reported on January 2.
Before this, the previous peak for monthly ESPO blend loadings from Kozmino was in October, with 40 cargoes shipped out, as per CAS data.
Of the 41 cargoes, each weighing 100,000 mt, 40 have already discharged or are scheduled to discharge in China, while the remaining shipment was unloaded at India's Sikka port, where Reliance operates the country's largest refinery, the 1.36 million-b/d Jamnagar refinery.
In December, around 16 ESPO cargoes, totaling 1.6 million mt, arrived in China for independent refineries located in eastern Shandong province, according to S&P Global Commodity Insights.
This figure is six cargoes less than the 22 that were discharged for those refineries in November.
The newly operational Yulong Petrochemical, with a capacity of 400,000 b/d, received two ESPO cargoes in December, down from three in November and seven in October.
The other 14 cargoes were primarily obtained by smaller independent refineries based in Dongying, which regularly purchase this grade.
In late October, the differentials for December ESPO blend reached a one-year high, with premiums of approximately $1/b compared to ICE February Brent crude futures, DES Shandong, for cargoes delivered to China. This surge was influenced by concerns over potential supply disruptions in the Middle East and increasing competition from major Chinese companies.
Recently, the differentials for February ESPO blend cargoes have increased further, with shipments to China reportedly commanding premiums just over $2/b in comparison to ICE April Brent, DES Shandong.
This price level has not been seen since November 2022 when cargoes arriving in December 2022 traded at premiums exceeding $2/b to ICE Brent, DES Shandong.
Traders have identified tighter supply and rising prices of Iranian crude, along with stricter sanctions on Russian crude sales, as key factors contributing to the increase in ESPO blend crude prices for the February-loading cycle.
Despite a month-over-month decrease in crude throughput at Chinese refineries due to weak refining margins in December, with fewer scheduled maintenance activities, higher prices have emerged.
In December, 50 state-run refineries in China and four major private facilities aimed to process 10.42 million b/d of crude, down from 10.54 million b/d in November, yet up from 10.19 million b/d in December 2023, according to Commodity Insights data.
The ESPO blend crude from Far East Russia is expected to remain the preferred feedstock for China's independent refiners in 2025, with the anticipated Trump administration in the US unlikely to significantly alter the flow of this grade between the two nations.
Traders and analysts consulted by Commodity Insights in December indicated that ESPO blend shipments to China are expected to persist or even rise in 2025, supported by existing pipeline supply arrangements between Russia and China, along with competitive prices for seaborne ESPO blend compared to other crudes of similar quality from the Middle East, keeping Chinese independent refiners focused on this grade as their primary feedstock.
Before this, the previous peak for monthly ESPO blend loadings from Kozmino was in October, with 40 cargoes shipped out, as per CAS data.
Of the 41 cargoes, each weighing 100,000 mt, 40 have already discharged or are scheduled to discharge in China, while the remaining shipment was unloaded at India's Sikka port, where Reliance operates the country's largest refinery, the 1.36 million-b/d Jamnagar refinery.
In December, around 16 ESPO cargoes, totaling 1.6 million mt, arrived in China for independent refineries located in eastern Shandong province, according to S&P Global Commodity Insights.
This figure is six cargoes less than the 22 that were discharged for those refineries in November.
The newly operational Yulong Petrochemical, with a capacity of 400,000 b/d, received two ESPO cargoes in December, down from three in November and seven in October.
The other 14 cargoes were primarily obtained by smaller independent refineries based in Dongying, which regularly purchase this grade.
In late October, the differentials for December ESPO blend reached a one-year high, with premiums of approximately $1/b compared to ICE February Brent crude futures, DES Shandong, for cargoes delivered to China. This surge was influenced by concerns over potential supply disruptions in the Middle East and increasing competition from major Chinese companies.
Recently, the differentials for February ESPO blend cargoes have increased further, with shipments to China reportedly commanding premiums just over $2/b in comparison to ICE April Brent, DES Shandong.
This price level has not been seen since November 2022 when cargoes arriving in December 2022 traded at premiums exceeding $2/b to ICE Brent, DES Shandong.
Traders have identified tighter supply and rising prices of Iranian crude, along with stricter sanctions on Russian crude sales, as key factors contributing to the increase in ESPO blend crude prices for the February-loading cycle.
Despite a month-over-month decrease in crude throughput at Chinese refineries due to weak refining margins in December, with fewer scheduled maintenance activities, higher prices have emerged.
In December, 50 state-run refineries in China and four major private facilities aimed to process 10.42 million b/d of crude, down from 10.54 million b/d in November, yet up from 10.19 million b/d in December 2023, according to Commodity Insights data.
The ESPO blend crude from Far East Russia is expected to remain the preferred feedstock for China's independent refiners in 2025, with the anticipated Trump administration in the US unlikely to significantly alter the flow of this grade between the two nations.
Traders and analysts consulted by Commodity Insights in December indicated that ESPO blend shipments to China are expected to persist or even rise in 2025, supported by existing pipeline supply arrangements between Russia and China, along with competitive prices for seaborne ESPO blend compared to other crudes of similar quality from the Middle East, keeping Chinese independent refiners focused on this grade as their primary feedstock.