China’s crude inventories are expected to extend uptrend to a record high in June, analysts said, as buyers continued purchasing crude amid low prices and improving economic activity. However, the rise in throughput cannot keep pace with the increasing inflows of cheap crude oil.
An industry survey found that China’s seaborne crude arrivals would likely hit a new record high of 14.16 million bpd in June, breaking the previous high of 10.21 million bpd in May. According to China’s customs administration, total crude imports, including imports via pipeline, reached 11.34 million bpd in May. Meanwhile, the domestic crude output is expected to be steady at around 3.9 million bpd in the first six months of 2020. This means that China’s oil supplies will average 14.3 million bpd in June.
Strengthening refinery margins have encouraged state-refiners: PetroChina, CNOOC, Sinopec, and Sinochem to ramp up their combined runs to an average of 80% of capacity from 76% last month. Industry sources estimated that China’s crude throughput would likely be between 13.8 million and 14 million this month.
The survey estimated that China’s crude stockpiles reached 842 million barrels last week, the highest since January 2017, when the survey began. The rise in oil stockpiles, however, faces challenges from bottlenecks in Chinese ports. For instance, roughly 40 crude tankers are waiting to discharge at Shandong’s Qingdao port as of Monday. A source with the port said that it would be impossible to work through the queue by July. As a result, about 18 cargoes with 23.9 million barrels of oil have been floating around the port for more than a week, tanker tracking data showed.
