The ARGUS crude delivered to Shandong price assessments
Argus delivered ex-ship (des) Shandong assessments are the first transaction-based prices for China. These five crude grades are the most traded on Shandong’s spot market, and allows traders, producers and refiners to shift from risky fixed-price deals to floating-price indexation.
Des Shandong trade flows
Des Shandong Johan Sverdrup
Norway’s Johan Sverdrup is a major new source of supply to the Chinese market. With a specification of API° 28 and Sulphur 0.8pc, Johan Sverdrup is considered a competitor to Brazilian and west African grades. Like the rest of the des Shandong price assessments, des Shandong Johan Sverdrup is assessed as an average of deals done over the day, but with an assessment window of 60 to 100 days forward.
Des Shandong Lula
Two-thirds of Brazilian crude exports are shipped to China, half of which end up in Shandong. The Argus des Shandong Lula assessment provides the first-ever market assessment for Brazil’s largest export stream that does not price at the point of loading. The des Lula assessment gives producers, traders and refiners an option to shift to floating price indexation from fixed-price trades in a volatile market environment. Argus’ highly-liquid des Lula assessment also provides market participants a much-needed reference price for the settlement of swaps contracts.
Des Shandong ESPO Blend
The Argus des Shandong ESPO Blend assessment complements Argus’ successful fob Kozmino assessment for Russia’s core export grade to Asia-Pacific, giving market participants price visibility down the supply chain. China is the main market for ESPO Blend, and the des Shandong market trades ESPO Blend all month-round.
Des Shandong Djeno
The Argus des Shandong Djeno assessment provides buyers and sellers with a reference price for sales of all west African grades to northeast Asia, simplifying the process of agreeing term contracts for buyers and sellers. Most west African crude exports head to Asia-Pacific, where Congolese Djeno has emerged as the most-liquid traded grade in a fragmented delivered market.
Des Shandong Oman
Oman is the only significant non-Opec producer in the Mideast Gulf, exporting over 200,000 b/d to Shandong province. Argus’ des Shandong Oman assessment gives a vital indication of the value of sour crude traded to China, and the marginal price for competing grades such as Russian Urals. Spreads between the Argus des Oman and des ESPO Blend assessments give a geographically precise measure of the relative value of sweet and sour crude in northeast Asia. In contrast, the international Brent-Dubai EFS — the premium of Ice Brent crude futures to Dubai swaps — can spike or collapse in response to changes in supply in the North Sea or from Opec producer countries. The delivery period of Argus’ des Oman assessment aligns with the front-month sour crude futures contract on Shanghai-based energy exchange INE, where the bulk of INE liquidity occurs.
Where to find these assessments
These four des Shandong price assessments are published daily in our Argus Crude service, where you can also find news and analysis for over 80 different internationally-traded crude streams.
Argus China Petroleum
The Argus China Petroleum service offers in-depth daily coverage of oil markets in China and includes over 30 sets of key data tracking prices and supply and demand fundamentals, as well as a monthly report analyzing market developments.