July 12, 2018, by Chen Aizhu and Meng Meng
BEIJING (Reuters) – China’s crude oil imports fell for a second month in a row in June to the lowest since December, as shrinking margins and volatile oil prices led some independent refiners, known as “teapots”, to scale back purchases.
June shipments came in at 34.35 million tonnes, or 8.36 million barrels per day (bpd), according to data from the General Administration of Customs.
That was down 9 percent from 9.2 million bpd in May and also down from 8.8 million bpd in June last year. Thomson Reuters Oil Research had pegged China’s crude oil arrivals in June at 35.13 million tonnes.
Imports for the first half of this year were still up 5.8 percent from a year earlier at 225 million tonnes, or about 9.07 million bpd, the official data showed.
While some state-run and independent plants were shut for regular maintenance, others took advantage of weakening margins and oil prices at near four-year-highs to conduct extended shutdowns.
“The numbers are lower than we expected, mostly because of slowing down at some teapot plants as they face growing domestic competition in refined fuel supplies and weakening margins,” said Seng Yick Tee of consultancy SIA Energy.
“The oil price volatility is certainly not helping as not many independent plants are doing sophisticated hedging.”
Shandong Shengxing Chemical Group shut its crude oil unit at the end of April and only expects to resume operations around mid-August.
Shandong Haiyou Petrochemical, a Rizhao-based teapot with annual import quotas of 3.2 million tonnes, has kept its crude unit shut since late May without a definite date to reopen.
Imports of oil products fell 26.5 percent to 2.22 million tonnes, while oil product exports fell 22.0 percent to 4.78 million tonnes, data showed.
However, total gas imports in June – including pipeline gas and liquefied natural gas – rose to 7.3 million tonnes, up 31 percent from a year ago, customs said.
Year-to-date imports hit 42.08 million tonnes, 35.4 percent higher than the same period in 2017.
Gas maintained high growth as demand remained strong for storage fills as well as for industrial uses.
Local governments are rolling out hikes in benchmark city-gate gas prices for residential use, following a policy change by Beijing in May to unify residential prices with industrial users. In a boost for gas producers, the change effectively removes long-running subsidies for the residential sector.
Reporting by Chen Aizhu and Meng Meng; editing by Richard Pullin