CHINA DATA: June oil products imports slump to 20-month low of 3 mil mt

China's oil products imports slumped 33.2% from May to a 20-month low of 2.97 million mt in June, data from the General Administration of Customs showed July 12, as independent refineries cut feedstock fuel oil purchases.

The previous low was at 2.53 million mt in October 2022, the GAC data showed.

Independent refineries' fuel oil imports fell 15.2% on the month to 939,000 mt in June, S&P Global Commodity Insights data showed.

"A few independent refineries cut throughput due to bad refining margins, capping demand for feedstock fuel oil even in the coming months," said a Shandong-based refinery source.

The average utilization rate of independent refineries in Shandong was 52% in June, the lowest since the pandemic first struck the country in 2020, according to local information provider JLC. The utilization rate was previously lower at 43.8% in February 2020.

GAC's oil products import and export data tend to include a basket of oil products, with gasoline, gasoil, jet fuel and fuel oil accounting for the majority. The breakdown of products would be released July 20. China's fuel oil imports comprise barrels for bunkering and for refining.

Due to heavy fuel oil imports earlier this year, the volume in the January-June period remained 9.9% higher than that in the same period of 2023.

Weak crude imports

Average crude imports fell 2.9% year on year to 11.1 million b/d (275.48 million mt) in the first half of 2024, the GAC data showed.

The decline was due to the 10.8% year-on-year reduction seen in June this year, the sharpest fall since June 2022 when refining activities were dampened by lockdowns across the country.

Last month, China imported 11.35 million b/d (46.45 million mt) crudes, rising 2.2% on a barrels-per-day basis. GAC releases data in metric tons that Commodity Insights converts to barrels using a 7.33 conversion factor. On a metric tons basis, the volume in June went down 1.1% from May.

Demand for refining feedstock has been weak. The country's overall crude throughput remained subdued in June and early July as state refiners reduced runs on the back of weak demand for oil products and maintenance, overshadowing higher utilization rates by private mega refiners, Commodity Insights reported.

The average utilization rate at the 50 state-owned refineries fell to a 22-month low of 78.4% in June, from a 12-month low of 78.7% in May.

"We anticipate China's crude import growth to be significantly weakened in 2024, with an annual growth rate decelerating from 1.1 million b/d in 2023 to 38,000 b/d in 2024, mainly owing to the decelerating refinery runs growth," Commodity Insights analysts said in a monthly report June 30.

Some oil traders even projected a year-on-year decline in the country's crude imports this year.

"There would be an uptick in Q3 as the peak demand season comes. In general, however, crude imports are likely to fall in 2024 as electric vehicle and LNG substitutions, along with improving efficiency, continue to exert pressure on gasoline and diesel demand, while gloomy economy caps consumption," a Hong Kong-based trader with a state-owned refinery said.

Oil products exports

Meanwhile, oil product exports edged up 0.3% month on month to 5.37 million mt in June, representing a 18.9% year-on-year jump.

However, the outflows in H1 remained 3.8% below the level in the same period last year, in line with the country's cautious stance on clean products exports that emerged at the beginning of 2024.

Sources with the refining industry have been calling for wider outlets for oil products exports, so as to balance the slow domestic demand with rising refining capacity.

However, no sign has emerged of the government possibly encouraging exports, while export margins remain less attractive.

Refineries, state-owned or independent, keep looking for opportunities to export MTBE to lower gasoline inventory pressures. MTBE is a blending component for gasoline and is free from export restrictions.

China's oil trade data:

(million mt):

Source: General Administration of Customs