China's May crude oil imports fall 8.7% on weak refining margins
China's crude oil imports fell 8.7% in May from a year earlier as refiners scaled back purchases amid heavy plant overhauls, subdued profit margins and weak demand for refined oil products. Imports last month by the world's largest crude oil buyer amounted to 46.97 MMt, or about 11.06 MMbpd, data from the General Administration of Customs showed. That is up from April's figure of 10.88 MMbpd and off a strong base a year earlier at 12.11 MMbpd.
The lower imports came as large state-run refineries such as Sinopec's Zhenhai and Zhanjiang, PetroChina's Dushanzi and Dalian plants undergo regular maintenance, Chinese commodities consultancy Oilchem said. "Apart from heavy refinery maintenance activities in April and May, weak gasoline and diesel demand was also the key reason for the pressured runs. Domestic diesel demand this year is especially weaker than expected with the fast penetration of LNG trucks owing to relatively cheaper gas prices," said Lin Ye, an analyst with Rystad Energy.
Ye added that declining crude throughputs contributed to rising crude oil inventories which had started building up since mid-April, despite the slowdown in imports in May. Smaller independent plants in the eastern refining hub of Shandong also cut production as higher crude costs pinched refining margins, with some pushed to process more lower-priced fuel oil.
Shandong-based independents processed at an average of 55.5% of capacity in May, down from 62.2% in May 2023, Oilchem said.
China's onshore above-ground crude oil inventories rose to the highest since the end of last year, at 946 million barrels, according to Vortexa Analytics, reflecting weaker refinery demand.
However, ANZ analysts said in a note that improving refinery margins should send crude oil imports rising again in June and into the third quarter. Imports for the January-May period totaled 229.03 MMt, or about 11 MMbpd, down 1.2% from the corresponding period of 2023.
Customs data also showed China's natural gas imports for May rose 6.5% from a year earlier to 11.33 MMt, bringing year-to-date volumes to 54.28 MMt, or 17.4% higher than the year-earlier levels.
Exports of refined oil products, which include diesel, gasoline, aviation fuel and marine fuel, grew 9.49% from a year earlier to 5.35 MM, and also up from 4.55MMt in April. The increased product exports were driven by higher refined oil product inventories, the ANZ analysts said.
The higher exports were also aided by new government export quotas released in early May as refiners cashed in on stronger bunkering demand for aviation fuel, although margins for diesel exports slumped due to excess regional supplies.
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