BEIJING: China’s crude oil imports jumped to a record high in December as refiners stepped up purchases ahead of a possible Opec deal to cut supply and bolster prices, and as more independent refiners won import permits. Exports of refined fuel also surged to a new high as the country’s giant state refiners shipped more product offshore in the face of a growing domestic surplus, adding to pressure on Asian refining margins. Crude imports hit 36.38 million tonnes in December, data from the Chinese General Administration of Customs showed, or 8.57 million barrels per day (bpd). This was up 9 percent from November and well above the previous record of 8.04 million bpd set last September.
China’s December imports also exceeded the 8.09 million bpd imported by the United States in July, its highest level for 2016 to date, according to data from the Energy Information Administration. For calendar 2016, China’s crude imports reached a record high at 381 million tonnes, up 13.6 percent or by 912,000 bpd over 2015, marking the strongest annual growth by volume on record, market analysts said. “My gut feeling is that the joint cut by Opec and non-Opec in early December stirred up strong interest from refiners and traders to bet on higher prices, particularly from those independent refiners which have not exhausted the usage of quota at the time,” said Harry Liu, oil analyst with consultancy IHS.
The hefty increases in imports were driven primarily by a new group of importers, independent oil plants also known as “teapots”, which were allowed into the market in late 2015 in a bid to encourage more private participation in the oil sector. Higher imports were also due partly to declining domestic crude oil production as dominant state oil and gas majors shut down high-cost wells because of weak global oil prices. Independent refiners are expected to buy more oil this year on a view that Beijing will provide import quotas to more teapot plants while keeping quotas steady for existing importers, a move that should help erode the global supply glut. Seng Yick Tee, a researcher with consultancy SIA Energy, said he expected China’s crude imports to rise by 600,000 bpd in 2017, with teapots accounts for two-thirds of the increase. Exports of refined oil products exports last month rose nearly 25 percent on a year earlier to a record 5.35 million tonnes, topping November’s previous record of 4.85 million tonnes. Fuel exports for the whole of 2016 rose a third year-on-year to 48.3 million tonnes, while imports were down 6.5 percent at 27.84 million tonnes, as refinery output far exceeded fuel demand growth at home.
