China, Asia’s second-largest fuel oil importer, cut shipments last month by 60 percent to the lowest level in at least 11 years, data from the General Administration of Customs in Beijing show.
Overseas purchases of the residual fuel fell to 1.13 million metric tons in May, down from 2.83 million tons a year earlier and the least since Bloomberg started tracking the figures in January 2003. In the first five months of this year, imports declined 33 percent to 8.4 million tons.
China’s smaller, independent refineries in the eastern province of Shandong process fuel oil and crude to make gasoline and diesel. These so-called teapot plants, which account for more than half of the nation’s fuel oil purchases, may be granted more crude-import licenses this year, an official at the National Development and Reform Commission’s Energy Research Institute said in March.
“Teapots are getting access to more crude,” Angie Huang, an oil analyst at ICIS-C1 Energy, a Shanghai-based commodity researcher, said by phone today. “It’s a trend that fuel oil will be more and more replaced by crude.”
China’s fuel oil imports may drop further to about 1 million tons in June, according to Huang.
The country halted purchases from Iran for a fourth month, the data show. Singapore was the biggest supplier with 428,177 tons, followed by Venezuela, which shipped 304,220 tons, while South Korea delivered 179,969 tons.