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A crude oil tanker at Qingdao Port, in Shandong province, China, on April 21, 2019.Jason Lee/Reuters

China’s crude oil imports surged in August, customs data showed on Thursday, as refiners built inventories and increased processing to benefit from higher profits from exporting fuel.

Shipments last month to the world’s biggest oil importer were 52.8 million metric tons, or 12.43 million barrels per day (bpd), the data from the General Administration of Customs showed. The daily rate is the third-highest ever, according to Reuters calculations.

Imports climbed by 20.9 per cent from July and were up 30.9 per cent from a year earlier, the data showed. For the first eight months of the year, imports rose by 14.7 per cent from the same period a year earlier to 379 million tons.

China’s imports have increased from last year since domestic fuel demand is no longer being suppressed by widespread curbs to tackle the COVID-19 pandemic.

“Refinery run rates are continually increasing,” said Xu Peng, a refined products analyst at China-based commodities consultancy JLC, adding that diesel exports margins are good and higher diesel exports will continue.

Xu also pointed to higher domestic demand. “August is the peak season for gasoline demand during the summer vacation, and (because) this is the first vacation period after the pandemic, travel demand is particularly high,” she said.

However, the broader outlook for China’s economy remains gloomy, with a weaker property sector and sluggish domestic consumption weighing on fuel demand.

The poor macroeconomic backdrop, combined with robust refinery runs, indicated that China has built product inventories through the month, analysts said.

“China has built up not only its crude oil stocks, but also its petroleum product stocks, particularly diesel,” analysts from Citi said in a client note on Tuesday.

At the same time, oil product exports are rising as refiners cash in on rising profit margins from selling fuel overseas.

Refined fuel exports last month rose to 5.89 million tons, customs said, up from 5.31 million tons in July and 23.3 per cent than a year earlier.

Regional refining margins rose month-on-month, averaging $12.60 per barrel through August versus around $6.60 per barrel in July.

Beijing issued a third batch of product export quotas last week, comprising 12 million tons for refined fuels such as gasoline and kerosene and 3 million tons for marine fuel.

China imported 10.86 million metric tons of natural gas in August, up 22.7 per cent from 8.85 million a year ago, the customs data showed, when importers pared back LNG shipments amid high global gas prices.

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