Chinese crude oil imports added 14 percent in July as refineries started ramping up processing rates after profit margins began improving thanks to stronger fuel demand.
The average daily intake was 9.66 million barrels, Reuters reports, with fuel exports rebounding as well last month, up by as much as 20 percent despite excess supply.
Over the first seven months of the year, China imported an average 9.84 million barrels of oil daily, a 9.5-percent increase on the year. Refinery processing rates were also running high for most of the year, hitting a record of 12.68 million bpd in April.
The July uptick in imports, however, may soon reverse: refineries will reduce their throughput during the current quarter ahead of the country's National Day holiday that begins in October, S&P Global Platts reported last month, citing a general state-imposed curb on industrial activity aimed at keeping pollution in check and reducing the risk of accidents ahead of the holiday.
"Utilisation rates at refineries are picking up as they have started to see profit margins coming out of the red in recent weeks," one analyst told Reuters.
This stronger demand from some industries, notably mining, was one of the key drivers behind the higher imports and processing rates. The other was demand from new refineries, built by the so-called teapot refineries.
According to an analysis from Bloomberg released this March, this year will see refining capacity additions of as much as 890,000 bpd in China. Almost half of this will come from a new 400,000-bpd refinery property of teapot Hengli Petrochemical Co. which began trial runs at the facility five months ago. Full capacity is expected to be reached later in May.
Independent refiners account for almost a third of China's oil processing capacity, which stands at 15 million barrels daily and rising.
By Irina Slav for Oilprice.com
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Comments
This is because China’s economy is 28% bigger than the United States’ based on purchasing power parity (PPP) and far more integrated into the global trade system thanks to the Belt and Road Initiative.
China’s oil imports including increasing volumes from Iran are projected to average between 10 and 11 million barrels a day (mbd) in 2019.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London