Chinese Crude Imports Show Little Sign of Significant Demand Uptick This Year

Chinese seaborne crude imports stayed below the 10mbpd for the fourth consecutive month in February, suggesting Chinese crude demand is expected to remain with the seasonal average according to Vortexa.

• LSEG data put overall Chinese crude oil imports at 11.73mbpd in February. Official customs data saw Chinese January and February crude oil imports at an average of 10.8mbpd.
• Crude imports, however, saw a year-on-year increase last month, driven by robust holiday demand during the Lunar New Year holiday and base effects according to Vortexa.
• Previous projections showed the need for Chinese oil firms to replenish crude stocks as Sinopec’s inventories were to hit a two-year low in March. But there are currently no signs of building crude storage in recent month, which together with unchanged clean fuel export quotas on the year, raises further questions on a surge in Chinese oil demand this year.
• Recent oil products flow data also suggested that Chinese refiners remain well supplied, despite expectation of supply tightness due steepening backwardation on crude benchmarks.
• Chinese seaborne crude oil imports from Russia rose to 1.4mbpd in February, supported by higher demand from teapots for ESPO crude amid tightness in other discounted feedstocks, while stranded Sokol cargoes headed for China.
• Saudi Arabian seaborne crude exports to China fell to 1.5mbpd last month.
• China also increased flows from the Atlantic Basin last month. Brazilian flows rose by 45% on the month, Angolan shipments increased by 30% and other West African flows rose by 10%.