Shandong VLCC berth delay adds to China port congestion

The opening of a new oil tanker berth at China's Dongjiakou port has been delayed, potentially exacerbating port congestion in the key refining hub of Shandong province.

Dongjiakou, near the major port of Qingdao, had been due to open the new 2mn bl very large crude carrier (VLCC) berth on 2 August. But the start of operations has now been delayed until at least September because of issues with approvals, market participants said, although further details are unclear.

Qingdao remains choked with vessels that are waiting to unload crude, with little prospect of the backlogs easing until at least late August. Chinese refiners loaded up on crude purchases earlier this year as prices fell, sending imports to a record high of 12.94mn b/d in June but running up against the limits of import infrastructure.

China's crude imports are likely to fall back in the coming months, hit by slowing demand in central and southern regions because of flooding, as well as a shortage of import quotas.

Storage capacity constraints are also limiting the ability of buyers to take more crude. Qingdao port is on course to open a new 12.6mn bl crude tank farm at Dongjiakou this month, despite the delay to the new VLCC berth, helping speed tanker unloading. But limited pipeline capacity will remain a major bottleneck, even after the new facilities open.