CHINA DATA: January-April crude imports fall nearly 5% on year despite April inflow boost

China's crude oil imports in January-April fell 4.8% year on year despite inflows rising 6.6% to 10.51 million b/d in April as a recovery from the previous lows in March and February, data from General Administration of Customs showed on May 9.

Despite the compensation, China's crude imports in the first four months fell 4.8% year on year to 10.44 million b/d.

The trend is likely to continue as faltering domestic consumption amid tight COVID controls coupled with limited oil product exports access dampen Asia's top consumer's crude appetite, analyst said.

The country cut crude imports to a four-month low of 9.51 million b/d in February amid Lunar New Year as well as Beijing Olympics and raised the flow to 10.1 million b/d in March.

On barrels-per-day basis, the April volume went up 4.1% from March.

The rise was more likely contributed by the state-run refineries as the independent refineries cut their crude imports by 15.4% from March to 2.43 million b/d in April, the lowest level since February 2020, S&P Global Commodity Insights' data showed.

Suffered from surging crude prices and weak domestic demand, integrated independent refineries cut their average utilization rate to 77% while the Shandong-based private plants to 50.1% in April, which were two-year low.

State-run firms' April imports rise

State-owned refineries, however, lifted their crude imports in April as they scheduled less maintenance than in the same period of last year while domestic demand was initially expected to recover from the first quarter, and Beijing called for ensuring domestic supplies amid high oil prices.

But wider and wider movement controls in April pushed up refineries' oil product inventory, executives from both Sinopec and PetroChina said, which forced the state-backed firms to cut their averaged utilization rate to a two-year low of 76.4%, S&P Global Commodity Insights' data showed.

Lower throughput would draw down China demand for feedstock imports in the coming months as the end of COVID-19 control is unclear yet, analyst said.

S&P Global Platts Analytics estimated that China's oil demand would fall 6% year on year in Q2 and said that it is uncertain whether the reduction in this quarter will be compensated by recovery in H2 if Beijing continues with is dynamic zero-COVID strategy.

Overall shipment in May set to stay low despite independent refineries could take more heavily discounted Russian crude cargoes.

Oil products exports slumps 44%

Moreover, Beijing set to minimize oil product exports as responding to the global net-zero calls by reducing selling high-carbon products in overseas markets while cutting its own emissions, which also cap Chinese refineries throughput despite strong product cracks in overseas.

Moreover, as responding Beijing's call to keep barrels at home to ensure supplies amid high oil prices, to China slashed its oil product exports by 44% year on year to 3.82 million mt in April, which was also down 6.2% month on month.

"Rather than high freights or difficulties of getting a clean tanker, it is more because of limited export quota availability that caps China's oil product exports," a source with a state-owned trading house said.

In January-April, the oil product outflow volume dropped 38.3% to 15.18 million mt as the reduction in gasoline, gasoil and jet fuel exceeded the increase in bonded bunker fuel oil supplies.

As a result, China's net oil product exports slumped 56.5% to 7.21 million mt in the first four months, GAC data showed.

In a recent meeting, the National Development and Reform Commission is believed to target eliminating all cargo exports except those supplies to Hong Kong and Macao, while keeping the supply of bonded bunkering fuel oil and bonded jet fuel for ships and flights going to international destinations, which are counted as exports.

Cargo exports to Hong Kong and Macao only account for up to 16% of China's total gasoline, gasoil and jet fuel exports in pre-COVID-19 years, S&P Global Commodity Insights estimated.

China's preliminary oil trade data (million mt)

Source: General Administration of Customs