Skip to main content

Advertisement

Advertisement

Business

China's annual crude oil imports drop for first time in 20 years

China's annual crude oil imports drop for first time in 20 years

FILE PHOTO: Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song/File Photo

SINGAPORE : China's annual crude oil imports slid 5.4per cent in 2021, dropping for the first time since 2001, as Beijing clamped down on the refining sector to curb excess domestic fuel production while refiners drew down massive inventories.

China has been the global oil demand driver for the last decade, accounting for 44per cent of worldwide growth in oil imports since 2015, when Beijing started issuing import quotas to independent refiners. Benchmark Brent crude oil weakened slightly to $84.40 per barrel in the wake of the data release.

The fall in shipments into the world's top crude importer, to 512.98 million tonnes (equivalent to 10.26 million barrels per day) from 2020's 542.39 million tonnes, was shown in data from the General Administration of Chinese Customs on Friday.

Reuters last year reported slowing imports https://www.reuters.com/article/china-oil-refineries-idCNL4N2OQ35R into the world's No. 2 refiner as Beijing scrutinised tax evasion and irregular quota trading among independent refineries and also cut fuel export quotas to restrain crude processing.

(GRAPHIC-Crude oil importers 1980-2020: https://fingfx.thomsonreuters.com/gfx/ce/xmpjobedgvr/GlobalCrudeImporters1980to2020.png)

December oil arrivals reached 46.14 million tonnes, up nearly 20per cent in the first monthly year-on-year growth since April, as independent refiners rushed to utilise 2021 quotas, customs data showed. The December influx, equivalent to about 10.87 million barrels per day, was the highest daily amount since March.

The drop for 2021 compares with an average annual import growth rate of nearly 10per cent since 2015, according to China customs data.

(Graphic- China annual crude oil imports https://fingfx.thomsonreuters.com/gfx/ce/klvykqjqlvg/ChinaCrudeImportsAnnual2021.png)

In 2020, companies went on a massive stock-building drive amid the lowest oil prices in decades and a rapid recovery in fuel demand from the early impact of the COVID-19 pandemic. But in 2021, refiners and traders drew down inventories amid higher prices and slower growth in fuel demand.

"Rising crude prices, a 'backwardated' market structure and the government's overall strategy to cool the hype in the commodities market worked together in driving down last year's crude oil imports," said Mia Geng, analyst with consultancy FGE.

In a backwardated market, prompt delivery prices are higher than those in future months, discouraging companies from storing oil.

Liu Yuntao, an analyst with Energy Aspects, estimated 70 million-90 million barrels of crude oil were drawn down from storage throughout last year, including a rare public auction of strategic petroleum reserves in September.

Monthly imports recorded year-on-year declines for eight straight months between April and November as Beijing probed the irregular trading of import quotas that has resulted in reductions in permits for the independent refiners.

Meanwhile natural gas imports, including piped gas and liquefied natural gas (LNG), expanded 19.9per cent in 2021 from the previous year to a record of 121.36 million tonnes, the customs data showed.

The growth, accelerating from the previous year's 5.3per cent increase, was buoyed by robust Chinese LNG purchases, especially in the first half of 2021, that saw the country leapfrog Japan as the world's largest buyer of the super-chilled fuel.

Friday's data also showed China's annual refined fuel exports dropped 2.4per cent over 2020 at 60.31 million tonnes, in the first decline since at least 2015, as the government tightened export quotas to discourage excessive domestic refinery production.

December shipments fell 45per cent year on year to 3.23 million tonnes last month, the lowest monthly level since July 2020.

Overall, China recorded deeper cuts in exports of diesel, gasoline and aviation fuel last year, while raising exports of low-sulphur fuel oil used as ship fuel under its ambition to become a regional marine bunker hub.

(Graphic-China's refined fuel exports in first decline since at least 2015: https://fingfx.thomsonreuters.com/gfx/ce/klpykqjmlpg/Chinaper cent20refinedper cent20fuelper cent20exports.jpg)

(1 tonne = 7.3 barrels for crude oil conversion)

(Reporting by Chen Aizhu; Editing by Raju Gopalakrishnan, Kenneth Maxwell and Gerry Doyle)

Source: Reuters

Advertisement

Also worth reading

Advertisement