China Jan-June crude imports fall, first H1 drop since 2013

BEIJING/SINGAPORE: China's crude oil imports in the first half fell 3% from a year earlier, the first contraction for the first six months of a year since 2013, as an import quota shortage, refinery maintenance and rising global prices curbed buying.

Imports totalled 40.14 million tonnes last month, data released by the General Administration of Customs showed on Tuesday, equivalent to 9.77 million barrels per day (bpd).

That compared with 9.65 million bpd in May and a record 12.9 million bpd in June 2020, when refiners snapped up cheap oil to supply a Chinese market fast recovering from the coronavirus.

For the first half of 2021, imports into the world's top crude oil importer totalled 260.66 million tonnes, or about 10.51 million bpd, 3% lower than a year earlier.

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Bumper purchases led by independent refineries had bolstered imports in the first quarter, pushing inbound shipments 9.5% higher than the same period of 2020.

Imports fell nearly 13% in the second quarter, however, versus the first three months as inventories climbed and refining margins were squeezed amid steadily rising global oil prices and a flood of imports of blending fuels such as light cycle oil that slipped into the diesel pool.

Independent refiners also faced tighter import quotas as the government stepped up scrutiny into crude oil imports by state and private refiners in an effort to tame a surplus in refining capacity and to curb emissions.

"The crackdowns on teapot crude quota trading and the non-compliant crude supply by national oil companies to teapots really hit the crude imports in June," said Seng Yick Tee, senior director at consultancy SIA Energy.

As a result of a crackdown on quota trading, China cut the second batch of quota issues to non-state importers by more than a third versus a year ago.

Sang Xiao, analyst at China-based Sublime Consultancy, expected the imports to stay subdued in July and August due to the quota reductions.

Tuesday's data also showed refined fuel exports rose nearly two-thirds over a year earlier to 6.44 million tonnes.

Total natural gas imports, including liquefied natural gas (LNG) and piped gas, remained elevated at 10.21 million tonnes last month, compared with 10.32 million tonnes in May.