BEIJING — China's imports of crude oil jumped 8.9 per cent in March from a year earlier to a near record, official data showed, as refiners took advantage of low prices to build up their stockpiles ahead of a spring demand surge.
Net oil product imports fell by 26 per cent from a year ago, suggesting that China's oil demand in March may not have fully rebounded from a weak 3.5 per cent apparent expansion in February.
The world's No. 2 oil consumer imported 3.26 million barrels per day (bpd) of crude oil last month, a fraction below a November 2006 all-time high of 3.29 million bpd. Overall the March number was higher because the month is one day longer.
“Part of the record crude imports must have been driven by the buying to stockpile and take advantage of more moderate prices,” said analyst Victor Shum at Purvin & Gertz in Singapore.
“Some of the increase must be due to demand in the post Chinese New Year season, getting ready for agricultural demand.”
The Lunar New Year — the most important festival in China which brings much of the country to a halt — began several weeks later in 2007 than the previous year.
This gave processors less time in February to replenish stocks drawn down by holiday travel, cooking and other festivities, so imports got a post-holiday boost the next month.
Major refineries trimmed runs for regular maintenance in March, meaning they likely used lower prices to top up crude stores and turned to overseas suppliers for fuel.
Net imports of refined oil products, excluding liquefied petroleum gas were up 64.4 per cent from the previous month, according to Reuters calculations based on customs data.
Diesel consumption usually rises as farmers start planting and energy-intensive construction work also picks up when temperatures rise, because cool weather can complicate building.
The lower crude prices in the first quarter of the year pushed refining margins back into the black after refiners spent much of the previous two years processing at a loss as Beijing kept pump prices below international levels.
First-quarter imports climbed 6.8 per cent from a year earlier to 3.22 million bpd, figures posted on the General Administration of Customs Web site (www.customs.gov.cn) showed.
The higher crude imports may not translate into firmer demand growth, even though plants now have an incentive to increase processing rates, as much of it is likely headed for both commercial and strategic storage.
“The question really is are they stockpiling? The Chinese have shown that they will stockpile at high prices and stockpile even more at low prices,” said Mr. Shum.
The full impact of rural planting and urban construction may not feed through until April.
As the weather heats up, however, demand is likely to surge, supported by air conditioning in the country's rapidly growing car fleet and individual diesel-fuelled generators in industrial hotspots.
Although China has largely resolved the power shortages that caused brownouts across much of the country in recent summers, key industrial zones in the Pearl River and Yangtze River deltas still face supply problems because of inadequate grids, the country's power regulator said last week.
To keep factories running, many firms have taken to generating their own electricity using oil-burning generators.
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