China stockpiled oil in July despite weak imports, refinery runs: Russell
(The opinions expressed here are those of the author, a columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia, Aug 16 (Reuters) - China's refinery processing and crude imports were unambiguously weak in July, but the world's largest oil importer still added to stockpiles, maintaining a trend of building inventories.
China added about 290,000 barrels per day (bpd) to either commercial or strategic crude inventories in July, according to calculations based on official data.
The July stockpile build reversed a draw of 470,000 bpd in June, and brought the total inventory additions for the first seven months of the year to around 1.02 million bpd.
China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles. But an estimate can be made by deducting the total amount of crude available from imports and domestic output from the amount of crude processed.
Crude imports were 8.79 million bpd in July, up fractionally from June's 8.72 million bpd, but it's worth noting that June and July were the weakest months for imports in four years, and July's total was down 9.5% from the same month last year.
Domestic oil output was 4.03 million bpd, giving a total of 12.82 million bpd available to refineries.
Refinery throughput was 12.53 million bpd in July, the lowest daily rate since March 2020 and down from 13.37 million bpd in June.
The data indicate that refineries processed about 290,000 bpd less in July than the volume of crude available from imports and domestic output.
The question for the market is whether China's crude refining sector, and thus its appetite for imports, has shifted to lower output on a structural basis or whether the current weakness is temporary.
Certainly July's soft throughput numbers came amid prolonged maintenance outages at some major plants.
But there is also softer domestic fuel demand as the world's second-largest economy battles to bounce back from several COVID-19 lockdowns in the first half of the year, and the lingering threat of more to come amid Beijing's ongoing strict zero-COVID policy.
That said, assuming the economy continues to recover amid stimulus spending and China avoids widespread COVID-19 lockdowns, it would be reasonable to expect fuel demand to recover and refinery run rates to increase for the rest of the second half.
Even so, run rate gains may be limited.
Another factor weighing on refinery utilisation has been the lack of quotas for refined product exports, meaning that both large state refiners and smaller independent operators have been unable to benefit from surging profit margins for some refined fuels in Asia, especially diesel.
Shipments of refined products dropped 39% in the first seven months of the year to the equivalent of about 945,000 bpd as the export quotas issued declined relative to 2021.
While new quotas issued in June and July are likely to see a rebound in product exports in August, it's still expected that overall refined fuel exports will decline by at least 30% for the whole of 2022.
The overall picture for China's crude oil imports is for stronger domestic demand and a short-term boost from new product export quotas.
However, the outlook for refined fuels exports in 2022 is still bearish. Once the current quota allocation is exhausted, the lack of product shipments will once again be a drag on crude imports.
It's also worth noting that Chinese refiners have still been importing around 1 million bpd more than they needed in the first seven months of 2022, meaning they have the ability to draw down on inventories rather than import fresh crude, should they choose to do so.
Ongoing high prices for crude, other than from Russia, may also act as a drag on import demand for the rest of 2022.
However, if crude prices continue to soften amid demand concerns, and major exporters to China such as Saudi Arabia start to reverse recent high official selling prices, Chinese refiners may decide to increase imports.
GRAPHIC-China crude available vs refinery runs: Link
Editing by Edwina Gibbs
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.