Overnight China's customs data revealed that with imports from both Russia and Saudi Arabia posting modest declines in the past month, Angola once again became China's largest crude supplier for the second time in September, taking the top position from Russia. China imported 4.19 million tonnes of oil from the southern African nation last month, up 45.8% from a year ago. That meant Angolan shipments stood at 1.02 million barrels per day, below 1.11 million bpd seen in August, the last time the country was the top exporter to China. according to Reuters
China imported record volumes of crude oil last month, eclipsing the United States as the world's top buyer of foreign oil as Beijing's state reserves shipped in cheap crude to fill new storage tanks. China's Pivate "teapot" refiners boosted runs to a record 55.98% as of Sept. 29.
The amount of crude oil heading east from ports on Africa's west coast is expected to reach a five-month high in September, partly driven by trading houses such as Trafigura and Gunvor, according to a Reuters survey.
Furthermore, it seems that as Saudi Arabia and Russia continue to posture for market share, the west African nation will be the winner for the foreseeable future: Chinese demand for Angolan oil, which is cheaper and deemed to offer stable supply, is set to accelerate in October as the refinery maintenance season comes to an end.
In the first nine months of 2016, Angola was also China's third-largest supplier. Imports jumped 17.7 percent on-year to 34.39 million tonnes (916,229 bpd) in the period, data showed.
Imports from Iraq jumped 58.4 percent in September from a year earlier to 4.07 million tonnes, or 989,400 bpd. In the January to September period, imports grew 10.3 percent from a year ago to 706,155 bpd. Imports from Russia were down 2.14 percent year-on-year in September at 962,620 bpd. Saudi Arabia supplied 949,500 bpd, down 1.29 percent.
While Saudi Arabia still holds the position of top suppler year-to-date, with shipments at 1.03 million bpd, the latest customs data will likely mean that both Saudi Arabia and Russia will accelerate their head to head fight for Chinese market share to regain the top position, by either boosting output or by further cutting prices to compete with the African oil-exporting nation.
What is also notable about the latest data Chinese oil import data is that despite an apparent drop in oil demand of 0.36% y/y to 10.12m b/d, China stockpiled crude oil at a record daily rate of 1.17m b/d in Sept. vs 1.14m b/d in Aug., according to Bloomberg calculations based on General Administration of Customs data. China bought ~873k b/d surplus crude in Jan.-Sept., highest for the period since 2004 when Bloomberg started tracking customs data.
Where is the excess oil going? Most likely toward China's strategic petroleum reserve. Bloomberg agrees, and notes that the stockpiling rate will persist throughout year-end as nation prepares for filling new SPR tanks in Zhoushan, Huizhou and Jinzhou, according to ICIS-China.