China’s crude oil imports surged on a daily basis to their second highest level in March, government data showed on April 13. A renewed push to fill strategic petroleum reserves (SPRs) could drive imports even higher later this year, despite maintenance capping demand in the shorter term.
In March, China imported 39.17 million tonnes (9.26 million bpd) of crude oil, according to General Administration of Customs (GAC) data. This was just below January’s record 9.61 million bpd and up by almost 10% on the 8.44 million bpd imported in February.
For the first quarter as a whole – which is considered a more reliable measure of Chinese demand than its individual component months, given that movements in the Chinese Lunar New Year holiday can distort year-on-year comparisons – China’s crude oil imports gained 7% on the previous year to reach 112.07 million tonnes (9.13 million bpd).
Independent refiners were widely seen as behind much of the first-quarter growth in imports, on the back of improved government quotas. Some estimates point to the teapots’ imports rising by as much as 30% year on year in the period.
PetroChina’s newly commissioned Yunnan refinery and China National Offshore Oil Corp’s (CNOOC) new Huizhou plant also boosted demand, as did commissioning of the expanded East Siberia-Pacific Ocean (ESPO) pipeline.
And while China’s shift into peak refinery period – with a raft of state-owned and independent plants scheduled to close temporarily for overhauls – should keep a lid on imports in the next couple of months, the country’s demand outlook looks stronger for the rest of the year.
The International Energy Agency (IEA) predicted on April 13 that China would expand purchases of crude for its SPR by nearly 30% this year, helping to compensate for technical problems that forced it to slow buying in 2017.
The agency expects China to inject 34.5 million barrels (94,500 bpd) of crude into its SPR this year – up by around 28% from 27 million barrels (74,000 bpd) in 2017.
“If current trade tensions between the US and China were to escalate, and given that the US is a growing supplier of crude to Chinese refiners, it is possible that the SPR programme will benefit from renewed impetus,” the agency said. The IEA estimates that the country’s SPR had expanded to 287 million barrels by the end of 2017.