China’s crude oil imports surged 17% year on year to hit a historical high of 10.76 million b/d, or 45.51 million mt in October, preliminary data from the General Administration of Customs showed Friday. The ample shipments in the month pushed China’s crude imports over January-October to reach 10 million b/d, or 414.55 million mt, up 10.5% year on year.
Executives at state-run refiner Sinopec and market analysts expected the country’s crude oil imports to stay high toward the end of this year. “China’s crude oil imports is possible to reach 500 million mt in 2019,” vice president of Sinopec Group, Yu Baocai said on Friday at the 8th China International Oil and Gas Trade Congress in Shanghai. Sinopec is the world’s biggest refiner by capacity and throughput.
Meanwhile, China’s independent refineries also increased their crude oil imports. In October, the sector’s crude oil imports hit a record high of 3.29 million b/d in October, up 50% year on year, S&P Global Platts data showed. “We expect China’s crude imports to average 10.13 million b/d in Q4, and our growth forecast for 2019 and 2020 is 691,000 b/d and 573,000 b/d, respectively,” S&P Global Platts Analytics said in its latest China Oil Market Forecast.
Platts Analytics expected the crude imports in Q4 to be driven by throughput increase of 776,000 b/d, which was higher than the 738,000 b/d estimated for the whole year. It was due to the start-up of 400,000 b/d Zhejiang Petroleum & Chemical (ZPC) in December, while the country’s turnaround activity continues to decline sequentially in Q4, it said in the report. Refineries will also look to maximize petrochemical yields ahead of the Christmas manufacturing season, it said.
OIL PRODUCT EXPORTS
Meanwhile, China’s oil product exports rose 25% year on year to 5 million mt, despite falling 12% on the month. Analysts and traders also expected to see stronger oil product export interest in Q4, amid high throughput and additional export quotas. Oil consumption growth, in particular for gasoline and gasoil is not typically strong in Q4 when outdoor construction and road travel slow due to lower temperatures and an absence of public holidays in November and December.
Therefore, high throughput could push more oil products overseas as listed refineries would prefer to keep products stocks low at the end of the year, in order to minimize the size of their balance sheets and improve equity returns.