China Jan-Feb crude oil imports rise 5.2% year-on-year on pre-virus restocking

[BEIJING] China's crude oil imports over the first two months of 2020 rose 5.2 per cent from a year earlier despite the spread of the coronavirus, customs data showed on Saturday, as refiners built up inventories of feedstock ahead of the Chinese New Year holiday.

Crude oil arrivals for the world's biggest oil importer were 86.09 million tonnes in January and February, equivalent to 10.47 million barrels per day (bpd).

That was up from 81.83 million tonnes, or 10.12 million bpd, in the same period for last year but down from 10.7 million bpd in December.

Natural gas imports were also up year-on-year, climbing 2.8 per cent to 17.8 million tonnes.

The General Administration of Customs said last month it would combine preliminary trade data for January and February instead of releasing data for individual months.

Early-year data in China is typically distorted by the week-long Chinese New Year holiday, while this year the coronavirus epidemic has also widely disrupted business.

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Refiners traditionally boost crude oil imports ahead of the holiday, which began on Jan 24, to stock up on supply.

As the virus spread in late January, China extended the Chinese New Year holiday and several cities introduced restrictions on vehicles entering their limits. Other land and air transport links were also cut.

The high import number has pushed up crude oil inventory levels, with refineries slashing run rates or carrying out overhauls to cope with the sharp fall in consumption of refined oil products, including jet and motor fuels.

According to commodity data firm Kpler, Chinese oil inventories soared to a record high of 782 million barrels in late February.

State oil refiners PetroChina and Sinopec cut their oil throughput by 10 to 20 per cent in February, while independent refiners in eastern China's Shandong province made larger reductions, some to less than half of their capacity.

Sinopec's largest refining subsidiary, Zhenhai Refining and Chemical Company, is expected to shut down a 160,000 bpd crude distillation unit around mid-March for regular maintenance.

Meanwhile, the average operating rate at teapots in Shandong was below 40 per cent by late February, the lowest level in five years, according to analysts at JLC consultancy and Longzhong Information Group.

The China Petroleum and Chemical Industry Federation has warned of financial pressure on some small- and medium-sized refineries due to a fall in sales and a rise in inventories.

REUTERS