Asia > Eastern Asia > China > China’s crude imports break 7m b/d record

China: China’s crude imports break 7m b/d record


China’s crude oil imports rose above 7m barrels per day for the initial time in December, reaching record levels as plunging international prices allowed the world’s major importer to fill strategic and commercial reserves.

International crude prices are near six-year lows, revisiting levels last seen in the wake of the world financial crisis. While price controls over transport fuels limit the boost to the Chinese economy, the drop has presented an unusual opportunity for China to increase reserves of crude oil at relatively little cost. China imported 7.15m bpd in December, bringing its full-year crude imports to a record 308m tonnes, up nearly 10 % on the year. Some of that additional request reflects economic increase and new refineries coming on line but most is probably going into tank farms, say market watchers.

Over the course of 2014 Chinese crude imports averaged 6.2m b/d, up 530,000 b/d or 9.6 % on 2013, at the same time as the increase rate was 5 %. China is the world’s biggest oil importer and its strategic reserve programme has long been a matter of conjecture, although the country has pledged better transparency over its stock builds.

In November, Beijing announced for the initial time the status of the initial phase of commercial storage facilities, but the pace at which the second and third phases are being completed and filled was not announced.

New commercial storage facilities plus an estimated 101m barrels of new strategic petroleum reserves (SPR) operated by the three national oil companies will lift China’s crude request by about 150,000 b/d in 2015, according to Argus Media estimates. In 2014, China is reckoned to have added 100m barrels to its stockpiles. Analysts had expected a jump in December crude imports because Chinese buying accelerated in October as the oil price rout gathered pace.

Chinaoil, the trading arm of China National Petroleum Corporation, went on a huge buying spree, snapping up millions of barrels of Middle East crude as world oil prices slumped.

It bought additional than 20m barrels of Dubai, Oman and Upper Zakum grades — a lot of of them from Unipec, the subsidiary of Chinese national oil company Sinopec. Most of these cargoes arrived in December.

“The increase in December imports is as well mirrored in the number of very large crude carriers heading to China, which picked up sharply from end-September, averaging a record high 76 in November,” said Amrita Sen, chief oil analyst at Energy Aspects, a consultancy.
Chinese import data can be “lumpy” on a monthly basis but tend to rise additional smoothly on a quarterly basis, cautions Thomas Hilboldt, Asian oil and gas analyst with HSBC in Hong Kong. “Will the January numbers be as shockingly headline-generating? The probability is not. You have to absorb it at some point.”

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