MOSCOW (MRC) -- China's crude oil imports fell from a record high in July, snapping a three-month rally, as sluggish domestic fuel demand due to flooding capped refinery feedstock requirements, reported S&P Global.
Crude imports fell 6.7% to 12.13 million b/d in July from a record high 12.99 million b/d in June, preliminary General Administration of Customs data released Aug. 7 showed.
However, the import volume remained above 12 million b/d for the second time on record, as Chinese buyers who rushed into the market to secure cheap crudes in March/April received their deliveries in the month due to ongoing port congestion.
The country's crude imports grew sharply from 9.72 million b/d in March amid COVID-19 pandemic.
GAC releases data in metric tons, which S&P Global Platts converts to barrels using a 7.33 conversion factor.
On metric tons basis, the country imported 51.29 million mt of crude in July, down 3.6% from June, the GAC data showed.
The month-on-month decline was more likely attributed to the state-owned sector as the crude imports for independent refineries surged to a fresh high of 4.68 million b/d in July from 4.4 million b/d seen in June, Platts data showed.
The high July volume took imports for the first seven months of 2020 to 11.01 million b/d, up 11.5% year on year, amid sustained low crude prices. The value of the crude inflows over January-July fell 23.7% on the year to $138.89 billion, the GAC data showed.
Looking forward in August, China's crude imports are likely to stay at a higher level due to the ongoing port congestion for discharging, analysts said.
Data intelligence firm Kpler said there were 79.16 million barrels of crude on tankers idled in Chinese waters for seven or more days in the week beginning Aug. 2.
The volume was four times of the normal levels seen before May 2020, despite easing from the record high of 88.61 million barrels seen in the week of June 29.
In September and October, however, the inflow volumes were expected to fall significantly as China halts its buying spree for August-loading cargoes amid high domestic stock, Platts reported.
As MRC wrote previously, China’s massive build-up of crude oil inventories this year slowed somewhat in July, but remained elevated by historical standards as imports stayed near record levels.
We remind that Chinese polyethylene (PE) producers have been running plants at around 80-90%, and inventories were heard around 640,000 mt, stable in the first week of August.
We also remind that four large new crackers are poised to start operations in China in the next 3-6 months, in a sharp expansion of the country's petrochemical cracker sector.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.