Chinese ports are struggling to unload record volumes of crude with storage tanks full after the country rushed to buy extra barrels during April’s oil price crash, according to traders and shipping data seen by Reuters.
More than 80 million barrels of crude oil are currently waiting to be discharged from tankers in Chinese ports, Refinitiv Eikon data showed.
Half of those are at the Qingdao port area in Shandong province, where the waiting time is two-three weeks or sometimes even longer, according to four traders.
“Our vessel arrived during the first days of June, but we’re still waiting to offload”, a trader with one oil major said.
The congestion at Chinese ports looks set to persist throughout July as there are still many tankers waiting to offload and more coming, traders said.
China scooped up bargain barrels loading in April and May with the oil market virtually paralyzed by coronavirus lockdowns.
Of the barrels still waiting to be offloaded, nearly 20 million were loaded in April and about 50 million in May, according to Refinitiv Eikon data. They span a variety of grades from Russian Urals to exotic Congo Djeno Blend.
During the last 10 days of June, major Chinese ports saw crude oil handling volume up 33.9% year on year and port inventory up 28.9%, according to China Port and Harbor Association data. For the whole month, crude oil handling volume rose 22.51%, the data shows.
“Notably, many ports are seeing near-full crude storage and tankers are queuing for offload,” – the Association said in its report.
Massive commercial storage construction in Shandong may help to offset congestion in the ports, traders said, adding that millions of tonnes of new storage space were to be opened for use in the second half of 2020.
(Additional reporting by Noah Browning; Editing by Kirsten Donovan)