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China’s crude oil imports could drop by as much as 15 to 20 percent on the year in February, due to the coronavirus outbreak and the slump in domestic fuel demand, the Global Times reported on Thursday, citing a researcher at the China National Petroleum Corporation (CNPC).
The lower demand with all the travel restrictions to contain the outbreak could lead to Chinese imports dropping by up to 8 million tons (or around 200,000 bpd) this month compared to the same month last year, Wang Lining, deputy director of the Oil Market Research Department at CNPC’s Economics and Technology Research Institute told the Global Times.
According to Refinitiv Oil Research, as cited by Reuters, crude oil imports in China are set to stand at 10.53 million bpd in February, down from imports of 10.69 million bpd in January—an expected drop of 160,000 bpd month on month.
March is also expected to see depressed demand and lower crude oil imports.
But if the coronavirus epidemic is contained in March, China’s oil imports could rebound in April and May, because of recovering gasoline and diesel demand, CNPC’s researcher Wang told the Global Times.
Due to weak fuel demand and depressed industrial activity, Chinese refiners—from the biggest refiner in Asia, Sinopec, to the independent refiners in Shandong—have cut refinery runs, while commodity trading houses and oil majors are scrambling to find spot buyers for crude oil outside China.
Refinery run rates at the largest Chinese companies CNPC and Sinopec have slumped by 15 percentage points since January, while the independent refiners’ utilization rates have plummeted by 28 percentage points as compared to the refinery operations before the Chinese New Year, Wang told the Global Times.
While refiners have cut run rates, China’s fuel exports are booming amid battered domestic demand, analysts and trade sources tell Reuters as higher Chinese exports flood the Asian market, which sees depressed demand from the outbreak itself.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.