The Plunge in China’s Oil Imports
In a flabbergasting turn of events, China — the globe’s top oil consumer — observed an alarming 18.8% slide in its crude oil imports in July. It’s the most dramatic monthly drop since January this year, according to Tuesday’s customs data revelation. With overseas shipments hitting a halt and a burgeoning domino of domestic inventories, the July total of imported crude arrived at a modest figure of 43.69 million metric tons. This translates to roughly 10.29 million barrels per day (bpd), a striking contrast to the 12.67 million bpd recorded in June — the second-highest in history.
Despite the plummet, the July imports still held a 17% upper hand when compared to the 8.79 million bpd of the previous year. During that period, widespread COVID turbulence and subsequent lockdowns mauled China’s economic landscape.
The January-July Crude Imports Picture
A broader lens on China’s crude imports for the initial seven months of 2021 showed a slightly brighter picture. During this period, the total crude imports reached 325.8 million metric tons, marking a 12.4% springboard leap from the corresponding months of 2022. But this overall surging trend fails to conceal the July dip, which echoes fewer imports from the ‘big-3’ crude exporters: the U.S., Saudi Arabia, and Russia, as pointed out by Emma Li, a China crude oil analyst at Vortexa in Singapore.
A Stockpile Cushion for China?
Li elaborated on a potent cushion for China’s economy in the form of the rising onshore crude oil inventories, exceeding 1.02 billion barrels by the end of July. Their consistent augmentation might empower Chinese refiners to lean back and slow down their crude purchases in the upcoming months.
On a different note, even with the overall lowered imports, state-owned refineries embraced an increase in their processing rates. According to data from Zhuochuang consultancy, an average hike in the range of 2-3 percentage points was witnessed, bumping their rates to 78-82% in July from June’s rates.
Fuel Profits Trumped by Asian Markets
Even amid the summer travel spike, a 3% dip in domestic gasoline inventories between mid-June and mid-July was observed. Conversely, diesel inventories experienced around a 2% increase, reflecting the effects of slowed merchandise exports and a property sector downturn, as evidenced by data from the Longzhong consultancy.
Furthermore, the lucrative profit margins on fuel prevalent in the Asian markets boosted Chinese oil product exports in July. They stimulated a higher processing rate, resulting in refined fuel exports soaring a staggering 55.8% — from 3.41 million metric tons the previous year to a robust 5.31 million metric tons last month.
Simultaneously, the import of natural gas didn’t lag behind, witnessing an 18.5% hike from 8.7 million metric tons the past year to a hefty 10.31 million metric tons in July, despite rising global liquefied natural gas prices.
