CHINA DATA: Oil product exports rise 139% on year to 32-month high in December

China's oil product exports rose 138.7% year on year to hit a 32-month high of 7.7 million mt (1.02 million b/d) in December 2022, data from the General Administration of Customs showed Jan. 13, as domestic demand weakened amid the strongest wave of COVID-19 infections and sufficient export quotas.

China removed all the domestic movement controls in December, leading to an estimated 80% of the population in big cities being infected with COVID-19, according to S&P Global and market analysts. The rising cases of new COVID-19 infections have kept people at home and dampened demand for oil products, leaving more barrels available to export. However, export volumes in December have remained below the high of 8 million mt in April 2022.

Market analysts said clean oil product exports during the month were likely above their estimates of around 6 million mt. The high volume is unlikely to be sustained in Q1 due to an expected recovery in gasoline and jet fuel demand amid the Lunar New Year holiday, with COVID-19 cases having seen declines since December 2022. A month-on-month decline in exports is expected despite the first batch of export quotas rising 46% on the year to 18.99 million mt.

GAC's oil product import and export data is believed to have included a basket of oil products, with gasoline, gasoil, jet fuel and fuel oil accounting for the majority. The breakdown of products will be released Jan. 20.

S&P Global Commodity Insights had earlier projected China's gasoline and jet fuel demand to rise by 4% and 15% on the month, respectively, in January. This would be about 91% and 53% of the volumes during the Lunar New Year period in February 2019. Gasoline demand is expected to recover strongly as people prefer to drive cars instead of taking public transportation to avoid infections, especially during the holiday period.

"Outflows should drop from their 2022 year-end peak of close to 5 million mt to about 3.6 million mt (954,000 b/d) on average in Q1 when assuming quota holders use 80% of their first-batch quotas (along with unused 2022 volumes) by end-May, Energy Aspect said in a report dated Jan. 3.

In 2022, total exports were down 11% on the year at 53.69 million mt due to the 40.7% year-on-year decline over January-June.

Oil product imports also fell 2.5% year on year to 26.45 million mt over January-December, resulting in a drop in net oil product exports of 17.9% over the same period, the data showed.

Crude oil imports up

Crude oil imports rose 4.2% year on year to 48.07 million mt (11.37 million b/d) in December 2022, GAC data showed, as independent refineries stepped up buying. However, they fell 0.5% from the 10-month high of 11.42 million b/d in November on a b/d basis.

Crude imports by independent refineries rose 9.1% from November to a 23-month high of 3.91 million b/d (16.52 million mt) in December as some refiners used quotas that were released for the first batch of 2023 in mid-October 2022, S&P Global data showed.

This brought total crude imports to an average of 10.21 million b/d in 2022, down 0.9% year on year, amid declines both in domestic demand and product exports. This is the second straight year to see crude imports decline.

In 2023, China's crude imports are set to rebound by around 800,000 b/d year on year to meet demand amid a healthy growth in GDP, with both the 320,000 b/d Shenghong Petrochemical and PetroChina's 400,000 b/d Guangdong Petrochemical complex commissioning volumes, said analysts based in Beijing and London.

"Significant increases in crude imports are more likely to be seen in the year's second half, while inflows would be capped in Q1 amid destocking activities," a Beijing-based analyst said.

Crude trades with independent refineries have slowed down in January ahead of the Lunar New Year with prices for spot cargoes falling, S&P Global reported earlier.

Kpler's data showed crude inventory rising to 896.67 million barrels in January, up from 889.59 million barrels in December 2022.

GAC releases data in metric tons which S&P Global converts to barrels using a 7.33 conversion factor.

CHINA'S OIL TRADE DATA (million mt):

Source: China's General Administration of Customs