China's Rongsheng buys June Murban, Upper Zakum
London (Quantum Commodity Intelligence) – Independent Chinese refinery Ronhsheng has bought 6 million barrels of Middle East crude for June loading, trading sources said Friday.
Rongsheng, which has become a significant player in the Asian spot market, has purchased 3 million barrels of light sweet Murban crude and 3 million barrels of the medium sour Upper Zakum, both produced in Abu Dhabi.
Sellers included Shell, Vitol and Gunvor.
The Rongsheng monthly tender has become an established feature in the market, particularly since Q4 of 2020 when the second phase of the ZPC refinery in Zhejiang, northeast China, was opened.
The new unit adds 400,000 b/d of processing, which takes total capacity to 800,000 b/d and makes it one of the largest processing plants in the world.
Prices were not disclosed, but Murban was rumored at around $1.55-$1.60/b above June Dubai, while the Upper Zakum was valued at above a $1/b premium to June Dubai.
Premiums have moved up from the previous month, although most of that is built into the market structure, with the backwardation strengthening with the rally in flat prices.
The June-loading cargoes are priced against Dubai assessments during the month of June, when August is the front-line month for Dubai, meaning the premium appears is higher than in a market with a flat structure.
On Friday, Quantum assessed the M2-M4 (Jun-Aug) Dubai spread at $1.05/b, which effectively values the Murban sales at $0.55/b over Dubai.
On Friday, Quantum assessed June-loading Murban at $65.70/b, compared to June Dubai at $65.10/b.
Quantum assessed June-loading Upper Zakum at parity to Dubai, implying a premium for June Upper Zakum versus June Dubai swaps at $1.05/b.
Earlier in April, ADNOC set the May-loading Murban OSP at Dubai +$1.40/b, while Upper Zakum was left unchanged at Murban minus $0.15/b.
Murban production capacity is around 1.7 million barrels per day and Upper Zakum around 700,000 b/d
May is the final month that ADNOC will use the medium sour Dubai benchmark as the underlying reference price for its OSPs.
From June all of ADNOC crude will be priced against Murban, using a monthly average of the recently-launched ICE Futures Abu Dhabi (IFAD).
Murban will be parity with the monthly IFAD average, while other grades will be set at a differential to Murban.
