China's May Crude Imports Drop

Imports drop as refineries use crude from commercial storage.
 

China's oil imports fell about 11 percent in May from a year ago in the steepest drop since November 2013, likely knocking the country off its perch as the world's top crude buyer - a spot it claimed for the first time in April.

Lower imports by China, at a time when markets are expected to be oversupplied following OPEC's decision to keep its output targets unchanged, dragged down global crude prices on Monday.

China imported 23.24 million tonnes of crude in May, data from the General Administration of Customs showed. This puts China behind the United States, which imported just under 30 million tonnes last month, according to calculations based on data from the U.S. Energy Information Administration.

On a daily basis, China's imports hit 5.47 million barrels in May, down nearly 26 percent from April's record 7.37 million barrels per day (bpd).

Strong imports in the previous months indicate "there was a significant commercial inventory build", said Seng Yick Tee, director of SIA Energy in Beijing. In May, China's refineries likely used crude from commercial storage, leading to lower arrivals, Tee added.

China's appetite for crude is, however, expected to pick up in the second half of the year as new commercial and strategic storage tanks are finished.

A higher number of refineries offline for maintenance could also have dragged on crude demand in May. Energy Aspects estimates maintenance to have peaked last month with about 1.2 million bpd of capacity offline, double that of April.

Data on China's refinery output will be available from the National Bureau of Statistics later in June.

Chinese fuel demand saw some recovery over the first four months as a rebounding oil market prompted refiners to pump at higher rates to take advantage of improving margins.

A crude oil manager at CNOOC Group, parent of CNOOC Ltd, said his firm's main 240,000-bpd refinery has been pumping at near full rates over the past few months.

In April, China's gasoline consumption rose 6.2 percent and diesel consumption rose 1.5 percent from year-ago levels, in implied terms which does not include changes in stocks, the National Development & Reform Commission has said.

Higher refinery throughput is reflected in China's January-May crude imports, which rose 4 percent on year to 133.87 million tonnes, or 6.47 million bpd.

The country accumulated some 60 million barrels of crude surplus between January and April, according to Reuters' analysis of official data. That surplus, which could be inflated due to under-reported  refinery runs and direct crude oil burning, compared to 48.5 million barrels a year ago.

China also imported 2.32 million tonnes of refined oil products in May and exported 2.44 million tonnes, indicating net fuel exports of 12,000 tonnes. China flipped to become a net oil product exporter in April, after being a net importer in the first three months.

By Chen Aizhu and Jacob Gronholt-Pedersen