In August, China’s storing crude rate went down for the second consecutive months due to the easing of the massive surge of imports.
The country posted 16.65 mt of crude output and imports were at 47.48 mt, giving total available crude of 64.13 mt or 15.1 million bpd. Refinery throughput in the month was at 59.47 mt or 14 million bpd. Hence, last month’s commercial and strategic stockpiles flow was roughly at 1.1 million bpd.
The flow was significantly down from 1.92 million bpd in the previous month, and even further down in comparison with June’s 2.77 million bpd. Also, for the first eight months of the year, the reading was also lower than the average even when still higher than the whole 2019’s 940,000 bpd.
The slowing was due to the offloading of the last surge of cheap crude bought by Chinese refiners during the brief producer price war in April. Refiners surged crude imports in the period of May to August, with June posting the highest number at 12.9 million bpd.
According to Refinitiv Oil Research, there are still significant logjams even after the flood of crude is gradually being offloaded. As of September 9, at least 12.5 mt or 91.25 million barrels are still offshore awaiting discharge.
The readings signaled that September’s imports and storage flows are likely to remain elevated, but should also continue to moderate back to more normal levels.
Looking ahead, questions arise on what would happen after China finished offloading the last batch of the cheap crude, whether it would continue to import at pre-price war levels and keep the extra crude as strategic storage or not.
China’s biggest suppliers in the Middle East have lowered their official selling prices (OSPs) for October-loading cargoes, which could maintain Chinese buying at robust levels. Meanwhile, exports from the Americas showed an earlier sign of decrease as it would slip in October after reaching record highs in September.
Data from Refinitiv showed that this month, China is likely to import 1.4 million bpd from Brazil, a steep 33% hike year-on-year but in October, imports would likely slump to roughly 400,000 bpd.
From the US, China’s crude exports would probably reach a record high of 876,000 bpd in September before dropping to around 660,000 bpd in October.
