China returns to play larger role in Angolan November crude program


China has returned to be the main buyer for Angola's November crude program, data from Platts shows, contrasting with the previous trading cycle, when more barrels headed to European refineries and the US.

"Asia took more and Europe and the US took less in November," an Angolan crude trader said. "It's a role reversal from the previous month."

Angolan crude is heavily dependent on China, with 40%-60% of Angolan crude exports typically going there every month.

Unipec, the trading arm of Chinese state-owned Sinopec, is by far the largest buyer of Angolan crude, often buying 35%-40% of the monthly export program.

However, during Angola's October and September trading cycles, buying interest from Chinese firms like Unipec, as well as Sinochem and Petroineos, dropped as a result of refinery run cuts in the country, amid low margins and high product inventories.

European and US buyers filled the gap left by China, with European refineries in particular increasing their appetite for Angolan crude, stimulated by robust refinery margins and cheaper freight rates.

November's program showed China returning to the market, with buyers like Unipec and Sinochem taking more Angolan spot market barrels in November than during the previous two months, said traders.

Other Chinese buyers are also buying on spot, despite high freight rates going East.

"They are definitely a bit concerned [about freight] but some buyers still need to buy for their refineries," a Chinese buyer said.

Major buyers like Unipec have bought more Angolan November cargoes than in previous months and could potentially buy even more, he said.

Platts tracking data shows for Angolan grade Saturno, four out of five cargoes will be heading to China in November, and likewise five out of six cargoes in the November program for Nemba crude.

Between five and nine November-loading cargoes are still unsold overall for Angola and with December's provisional loading program due on Monday, differentials have started to soften in Angola, traders said, which could spur China to look at further purchases, traders said.

Remaining November barrels could also head to the US, traders said, which has seen a pick-up in Angolan crude buying recently.

"Heavy [Angolan] grades are being bought by the US," a West African trader said. Angolan imports for the latest reporting week were at 65,000 b/d but hit 307,000 b/d in the week ending October 2.

Source from : Platts