Refinery start-ups and stabilizing refining margins drove China’s crude oil imports to a record high in October, Chinese customs data showed on Friday.
The world’s top oil importer increased its crude intake in October by 11.5 percent compared to the same month last year, to an average of 10.72 million barrels per day (bpd), according to Reuters calculations based on China’s government data.
The October imports easily beat the import figure from September, when China imported 10.04 million bpd. China’s total oil imports rose by 11 percent on the year in September. This was the first time since April that crude oil imports had topped 10 million bpd, before the record-breaking month of October.
Despite fluctuating refining margins in recent months and a glut of refined oil products, demand for crude in China continues to grow, also thanks to Hengli Petrochemical, which had a new refinery start up earlier this year and ramped up to full 400,000-bpd capacity at the end of May. Another 400,000-bpd refinery, of Zhejiang Petrochemical, began operations, further pushing demand for crude.
In addition, other small independent refiners, commonly known as teapots, kept crude processing rates at relatively high levels, thanks to steadying refining margins at the end of the summer. Related: Why Qatar Is Better Off Without OPEC
“Strong refining margins in August prompted both national oil companies and the independents to ramp their crude purchases, which mostly were reflected in October data,” Joey Chen, an oil consultant with FGE, told Reuters, commenting on the import figures.
While crude oil imports hit an all-time high in October, China’s natural gas imports dropped by 10.6 percent year on year. This was the first drop in Chinese natural gas imports since November 2016, Reuters estimates on Chinese data show.
China’s natural gas demand growth is slowing this year from the previous bumper years, while the import drop in October was also partially due to an outage at an import terminal operated by PetroChina.
By Tsvetana Paraskova for Oilprice.com
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And while the trade war between the United States and China has depressed the global demand for oil, it doesn’t seem to have affected China’s oil needs. This speaks volumes about the resilience of China’s economy and its ability to withstand the adverse impact of the trade war aided by the Chinese Belt and Road Initiative.
An end to the trade war will enhance the growth prospects of the global economy and China’s in particular with more crude oil imports to come.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London