CHINA DATA: July crude oil imports drop to 10.01 mil b/d, lowest since Sep 2022

China's crude oil imports dropped to 10.01 million b/d (42.34 million mt) in July, the lowest since 9.83 million b/d in September 2022, data from the General Administration of Customs showed Aug. 7, pointing to weak demand from the world's second biggest economy.

The country was in tight movement controls in 2022 from May to November. The low inflows in July this year led more and more analysts to expect an annual reduction in China's crude imports in 2024, unless Beijing release efficient stimulators to boost demand in order to meet the 5% GDP growth target.

The July volume represented a 3.1% year-on-year decline and a 11.8% reduction from June on a barrels-per-day basis. The GAC releases data in metric tons that S&P Global Commodity Insights converts to barrels using a 7.33 conversion factor. On a metric-ton basis, the volume in July fell 8.9% from June.

State-run refineries were likely the main contributor of the reduction, despite they lifted average utilization from 78% in June to 80% in July as maintenance ended. Independent refineries also cut their crude shipments by 2.97% from June to 3.65 million b/d, led by the small ones with capacity range between 40,000-214,000 b/d which remain running at low utilization, Commodity Insights data showed.

China's average crude imports over January-July broke below the 11 million b/d mark to 10.94 million b/d, down 2.9% or 324,000 b/d year on year, GAC data showed.

"We now believe China's crude imports to fall 150,000-200,000 b/d [year on year] in 2024 as gloomy economy caps demand, while alternative energy continues displacing transportation fuels, and crack are not strong enough to encourage product exports," said a Beijing-based analyst with an international trading company.

"Bet the government will release more measures to boost economy to hit the 5% GDP growth target. Hence, it is still possible to see rebounds in domestic oil demand," a Hong Kong-based analyst said.

China's crude import growth is expected to weaken significantly in 2024, almost coming to a halt, in contrast to the 1.1 million b/d growth rate observed in 2023, according to a monthly report released by Commodity Insights on July 31.

"However, due to the low base effect and seasonal demand in the third quarter, August imports are very likely to increase month on month," said Mongbi Yao, a senior research analyst with Commodity Insights. "We anticipate a year-over-year decline of 272,000 b/d in crude imports for the third quarter as demand pressures lead to subdued refining operations," she added.

Oil product exports down

Meanwhile, oil product exports fell 7.1% month on month to a three-month low of 4.98 million mt in July, GAC data showed.

Market sources estimated clean oil products exports to be steady on the month in August, at about 3.27 million mt, with jet fuel to account for about 1.7 million mt.

GAC's oil product import and export data are 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 Aug. 18.

There has been talks about the Chinese government may release 15 million mt of oil product export quotas in September, that would bring the country's total clean oil product export quota to as high as 48 million mt for 2024.

China's 2024 clean oil product exports have been widely expected to remain steady on the year at about 40 million mt, due to less attractive export margins and a slight surplus in the domestic market.

In July, oil product imports gained 9.3% from June to 3.25 million mt, despite independent refineries slashing feedstock fuel oil imports due to high cost and weak margin, GAC data showed.

The increase in imports and decrease in exports, however, failed to turn China into a net oil product importer in July, as the net oil product exports fell 27.5% month on month to 1.74 million mt.

China's oil trade (million mt):

Source: General Administration of Customs