China’s Record Crude Oil Imports Slowing as Fuel Exports Surge

  • June crude imports lowest in five months; record 1H purchases
  • Net oil product exports jump to highest since November

China’s record crude imports slowed in June, while its oil product exports surged to the highest in seven months.

The world’s biggest energy user imported 30.62 million metric tons of crude last month, according to data released by the General Administration of Customs on Wednesday. That’s about 7.48 million barrels a day, the slowest pace since January. Inbound shipments surged 14.2 percent to a record 187 million tons in the first half of the year. Meanwhile, net fuel exports jumped to 2 million tons in June, the highest since November.

Demand from independent refiners and the push to fill storage tanks has fueled China’s appetite for oil. Crude buying will remain robust in the second half of the year, according to analysts with Energy Aspects and ICIS China.

“An increase in refinery maintenance during May and June has tempered buying compared to March and April’s high volumes,” Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd., said in an e-mail. “New commercial and strategic reserve tanks are coming online, likely informing some of the strength in imports.”

Storage Demand

Demand from state reserves may pick up in the second half of the year to fill as much as 60 million barrels of storage space, Chauhan said. Meanwhile, China’s CEFC Energy started operation at its crude storage facility in Hainan on July 2. The facility, used for both commercial and emergency reserves, will be filled with 1.5 million cubic meters (about 9.4 million barrels) of oil by the end of this year, local newspaper Hainan Daily reported Wednesday.

“The high imports in the first half year was in big part driven by demand from teapot refineries,” Amy Sun, an analyst with ICIS China, said before the data were released. “China’s oil purchases will probably increase further in the next three months as more independent plants will get import quotas.”

Smaller refining companies that operate independently of the country’s state-owned energy giants have been allowed in the past year to import their own supplies, leading earlier this year to unprecedented congestion at the port of Qingdao, near where many of them operate.

Shandong Hengyuan Petrochemical Co. is among the most-recent of the so-called teapots to be allowed to use imported crude. The company was granted an annual quota for 3.5 million tons, the National Development and Reform Commission said Monday.

— With assistance by Jing Yang

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