Following months of ever higher Chinese imports, no doubt predicated by stockpiling and hoarding reserves, in June Chinese crude oil imports plunged from over 25 million metric tons to 21.72 MMTs, the lowest since December, or about 5.3 million barrels a day, down over 10% from the previous month's record import. While the number was still quite higher than the 19.7 million tons, the sudden drop is concerning, especially since the price of Brent slid materially in June, and if anything should have resulted in even more imports if indeed China was merely stockpiling crude for its new strategic reserve facilities. Which begs the question: was the demand actually driven by the economy, and just how bad is the economic slowdown over the past month if not even stockpiling at preferential prices can offset the drop in end demand?
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From Dow Jones:
China's refineries may process less crude in the third quarter due to weaker domestic demand for diesel, which has led to persistently high stockpiles and steady exports from the country's largest refiner, China Petroleum & Chemical Corp, or Sinopec Corp.
The country's crude throughput declined in both April and May, falling 0.3% and 0.7%, respectively, compared with the corresponding months a year earlier.
Weaker demand for diesel, a primary driver of refinery output, has tracked China's economy, which has slowed for five consecutive quarters. Manufacturing activity in June grew at its slowest pace since November.
High diesel inventories have led Sinopec's trading arm, China International United Petroleum & Chemicals Co., or Unipec, to export due to insufficient storage space, said a Beijing-based trader familiar with the matter.
Meanwhile, independent refining rates in eastern Shandong province were at 30.3% as of July 5, up 4.6 percentage points from a week earlier but still down 14.7 percentage points from a year earlier, Shandong-based energy consultancy Oilchem.net said. The majority of independent refineries are located in Shandong.
China's refined oil product imports in June totaled 2.93 million tons, while exports totaled 2.07 million tons, the data showed.