China Oil Imports Rise as Teapot Refinery Demand Overwhelms Port

  • Inbound shipments in April gain 3.2% m/m to 7.96 million b/d
  • Qingdao port congested as independent refiners boost purchases

Oil imports by China, the world’s biggest consumer after the U.S., rebounded amid strong buying by independent refiners that have helped push the country’s crude demand to a record and overwhelmed one of its biggest ports with tanker traffic.

Inbound shipments during April totaled 32.58 million metric tons, data from the Beijing-based General Administration of Customs showed on Sunday. That’s equivalent to 7.96 million barrels a day, up 3.2 percent from the previous month and near a record 8.04 million in February. Net oil-product exports fell 10 percent from March to 1.17 million tons.

Crude imports have been driven by smaller refining companies that operate independently of the country’s state-owned energy giants and have been empowered in the past year to import their own supplies. Increased purchases by these processors, known as teapots, caused a backup of tankers last month at the port of Qingdao, near where many of them operate in Shandong province. Imports through the region surged to a record in March and accounted for about 30 percent of the country’s total.

"The buying spree is supported by teapots utilizing their import quotas since the start of the year, which is reflected in their record operating rates," Amy Sun, an analyst with Shanghai-based commodities researcher ICIS-China, said by phone. “Congestion at Qingdao port may have also stretched the time it took customs to clear volumes that arrived in the first quarter. "

‘Unprecedented’ Traffic

China’s independent refineries boosted operating rates to a record of 53.02 percent of capacity as of April 29, according to industry website

Qingdao has been congested this year from "unprecedented" tanker traffic amid rising imports by teapot refiners, according to Liu Jin, general manager of Qingdao Shihua Crude Oil Terminal Co., which operates oil berths at the port. Imports may begin slowing this month and next because of a lack of storage and logistical bottlenecks, BMI Research said in a report May 5.

The country’s total exports stabilized last month as the value of the currency decreased, while imports continued to decline. Overseas shipments rose 4.1 percent in yuan terms from a year earlier while falling 1.8 percent in dollar terms. Imports extended a streak of declines to 18 months.

Production Declines

Sunday’s release is the first snapshot of the oil market during April in the country expected to overtake the U.S. this year as the world’s biggest importer. Refinery run data and more-detailed trade figures are due later this month. China’s crude imports during the first four months of the year rose 11.8 percent to 124 million tons (about 7.51 million barrels a day), according to the GAC data released Sunday.

China is raising imports while domestic production slides as state-run oil companies shut-in old, higher-cost fields. Output from the world’s fifth-largest producer during the first quarter declined 1.8 percent from the same period a year ago, according to the National Bureau of Statistics. Production will fall about 6 percent to 4.05 million barrels a day this year, Standard Chartered Plc forecast in a report May 3.

Coal imports during the first four months declined 2.5 percent from the same period the previous year to 67.25 million tons, Sunday’s data showed. Oil product imports slipped 1.2 percent while exports surged 45 percent.

— With assistance by Sarah Chen, and Jing Yang

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