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With a daily import rate of 9.17 million barrels of crude last month, China broke its own previous record and overtook the U.S. as the largest importer of the commodity globally, both in March and in the year to date.
One of the reasons for the spike in imports was teapots scrambling to get crude after they finally received their import quotas from the government. Last year, there was worry that they would not be assigned new quotas with Beijing giving preference to state-owned giants, but this failed to pass.
Most of the cargoes going to teapot refiners were scheduled to arrive in March, hence the record-breaking number. Some shipments for state refiners probably accounted for the rest of the increase – they were bought in December and January from North Sea producers and only arrived at their destination in March.
The increase in imports means that China has amassed a crude oil inventory of 1.7 million bpd, one analyst from HIS Markit told Reuters. The number is unprecedented, but in the coming months imports are bound to fall, Harry Liu noted, as Chinese refineries enter maintenance season. Other analysts share the opinion, with some expecting a sharp drop as soon as this month.
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Over the first quarter, China’s oil import rate averaged 8.49 million bpd, versus 8.17 million bpd for the U.S. According to Bloomberg, the trend of rising imports will continue as more refineries come on stream, fuel use expands, and the government ramps up its strategic reserves.
Meanwhile, domestic output is declining. For January and February, the Chinese National Bureau of Statistics reported a combined output of 31.44 million tons, or 230.455 million barrels, down 8 percent on an annual basis. The decline was a result of field depletion and the higher production costs associated with it.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.