MOSCOW (MRC) -- China's crude oil imports fell 4.7% on the month to 10.03 million b/d in September, reported S&P Global with reference to the latest data from the General Administration of Customs, or GAC, on Oct. 13.
The reduction indicated weak momentum for imports for the rest of the year, analysts said.
The country's crude imports have been under pressure due to destocking activity and limited import quotas, which recovered to 10.53 million b/d in August. This was the first time since April that imports had crossed the 10 million b/d mark.
Data intelligence firm Kpler showed that China's crude inventory fell 2.1% from August to 847.32 million barrels in September, indicating that destocking had continued amid rising crude markers.
It is more likely that state-run oil companies had contributed most to the decline both in the country's crude imports and inventory in September by drawing down their crude stocks, because S&P Global' data showed that China's independent refineries had increased their crude imports by 13.7% to 12.19 million mt, or 2.98 million b/d, from an 18-month low in August.
With the increase in imports and stable throughput in September, feedstock inventory at major ports in Shandong rose 11.6% on the month to 7.57 million mt as of Sept. 31, data from local information provider JLC showed.
The GAC releases data in metric tons, which S&P Global converts to barrels using a 7.33 conversion factor.
On a metric tons basis, volume fell 7.8% on the month and 15.3% on the year to 41.05 million mt in September.
This led imports in the first three quarters to decline 6.8% on the year to 10.4 million b/d, or 387.4 million mt, the GAC data showed.
Meanwhile, oil product outflows in September rose 10.8% to 4.14 million mt from the 13-month low of 3.73 million mt in August due to the allocation of new export quotas, the data showed.
Beijing, in mid-August, allocated 7.5 million mt of oil product export quotas, allowing oil companies to ship more barrels overseas. As a result, China's product outflows rose 8.3% year on year to 48.94 million mt in the first nine months.
However, market sources expect China to suspend exporting gasoline and gasoil in November and December following a month-on-month reduction of about 30% in October due to tight supply in the domestic market, while export quotas are running out.
Moreover, it is more and more unlikely that Beijing would allocate additional quotas for the remainder of the year, leaving oil companies with little choice, but to save quotas for exporting jet fuel, demand of which is bad in China, sources said. This means only 5.87 million mt, or 1.47 million mt/month, of oil product export quotas are available for September-December, compared with 31.13 million mt, or 3.89 million mt/month, in January-August.
As MRC wrote before, China's oil consumption is likely to peak around 2026 at about 16 million barrels per day and that of natural gas by around 2040, said a top executive of Sinopec Corp. in September 2021.
We remind that in August 2021, China Petroleum and Chemical Corp, also known as Sinopec, the world's petrochemical major, launched the first phase of the Gulei refining complex in Zhangzhou city in China’s southeastern Fujian province. The refining complex, a 50:50 joint venture between Sinopec’s Fujian Petrochemical Company Ltd and Taiwan Xuteng Investment Company Ltd, invested 27.8 billion yuan (USD4.28 billion) in the first phase. That will result in an 800,000 tonnes per annum ethylene plant, a 600,000 tonnes per annum styrene unit and seven other downstream petrochemical units, Sinopec said.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.
mrccplast.com