CHINA DATA: Jan-Feb crude imports gain 3% on year to 10.8 mil b/d

China's crude imports fell 5.7% to 10.79 million b/d in January-February from the 11.44 million b/d in December, showed data from the General Administration of Customs March 7.

This indicated destocking activity as Chinese refiners raised their crude throughput during the two months to meet healthy transportation fuel demand during the Lunar New Year holiday.

S&P Global Commodity Insights data suggested China's throughput rebounded in January and February from a six-month low in December, with the state-owned refiners hiking average utilization to a five-month high of 82.4% while two of the three private mega refineries raise run rates by three to six percentage points.

As a result, the country's commercial inventory fell 854.3 million barrels in the week started on Feb. 25, the lowest level since May 7, 2023, data from Ursa Space Systems showed. In comparison, the stock stood at 872.7 million barrels in the week started Dec. 24, 2023.

Meanwhile, the inflows in January-February went up 3.3% year on year on a barrels-per-day basis. During the same period of Lunar New Year, China's total oil demand rose 2% year on year, according to an S&P Global monthly report published Feb. 29.

GAC releases data in metric tons that S&P Global converts to barrels using a 7.33 conversion factor. On the metric tons basis, the volume stood at 88.31 million mt in January-February, rising 5.1% year on year.

Looking forward, S&P Global estimated China's crude imports to rise 1.6% year on year to 11.46 million b/d in 2024, against a 3.1% growth in total oil demand amid a 2.8% gain in domestics crude production.

Oil product imports rise, exports drop

In addition to crude oil, the small independent refineries imported about 2.24 million mt of fuel oil as feedstock in the first two months, surging 54.1% year on year, S&P Global data showed.

This helped to pushed the country's oil product imports to jump 35.6% year on year to 7.58 million mt over the January-February period, according to GAC.

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.

Meanwhile, the exports of oil products in the first two months dropped 30.6% year on year to 8.82 million mt, GAC data showed, leading to net oil product exports falling 82.6% on the year to 1.24 million mt.

"Muted trading activity and robust travel demand during the holiday season in February 2024 will also keep exports at a relatively low level in the first quarter of 2024. Clean fuel exports are expected to rise from just under 800,000 b/d in Q4 2023 to just below 900,000 b/d in Q1 2024, and then to above 900,000 b/d in Q2 as regional refineries undergo maintenance," said Shi Fenglei, S&P Global's downstream research and analysis director.

"Export margins are expected to trend downward in 2024 driven by intensified competition," Shi said and added that unless unexpected events occur, gasoline export margins in 2024 are projected to drop from this year's average of $4.11/b to minus $2.70/b, and diesel margins will decline from $5.30/b to minus $1.50/b.

The customs will release the exports breakdown of clean products on March 18.

China's oil trade data (million mt):

Source: China's General Administration of Customs