BEIJING: Crude imports surged 21.4 percent in the final month of 2015 to hit 7.82 million barrels per day (bpd), taking the average for the whole year to 6.71 million bpd, another record and a gain of about 8.8 percent, or 542,600 bpd, over 2014.
There is little doubt that China has been taking advantage of the relentless decline in crude prices to fill strategic and commercial stockpiles, a trend likely to continue this year, even if it may be at a slower pace given constraints on available storage tanks.
But the changing dynamics of the world’s No.2 economy is also having an impact on its domestic fuel consumption patterns, and by extension on its exports of refined products.
The biggest change is in middle distillates, where slower economic growth is cutting demand for diesel, which is often described as an industrial fuel given its role in rail and road transportation, and powering construction and other machinery.
Implied diesel demand in November dropped 7.8 percent year on year, according to data compiled by Reuters.
At the same time diesel exports have been ramping up, gaining 64 percent in the first 11 months of 2015 to 6.178 million tons, equivalent to about 138,700 bpd.
It’s not just surplus diesel that China is exporting, it has also boosted shipments of the other main middle distillate, jet kerosene, by 17 percent to 10.998 million tons, or about 256,800 bpd over the period.
Fuel exports totaled 975,500 bpd in December, a record high that helped boost the average for 2015 to 693,00 bpd, another record and 21.9 percent higher than in 2014.
Detailed figures for December will only be available later this month, but working on the 2015 average and it becomes clear that exports of middle distillates now dominate China’s outbound fuel shipments, accounting for about 58 percent of the total.
This is a marked change for China, which used to be a net importer of middle distillates and the only refined product it exported in significant quantities was gasoline.
Exports of gasoline rose 10.4 percent in the first 11 months of 2015 to 5.014 million tons, or about 127,600 bpd.
This gain is largely a reflection of China’s rising refinery throughput rather than any weakness in domestic consumption, which has been gaining on the back of stronger vehicle sales.
While the data shows what has happened, it doesn’t tell whether the trend of higher diesel and jet kerosene exports is likely to continue, nor what impact this may have on fuel markets in Asia.
