China’s imports of US crude oil are expected to break a new record in July. However, analysts said the estimates underscored that Beijing is lagging in meeting its commitments under the phase-one trade deal.
According to tanker tracking data, 26 vessels carrying about 31.02 million barrels of US crude are about to arrive in China next month. This figure is equal to about 1 million bpd, more than double the latest peak of 466,000 bpd in June 2018. China imported just about 41,500 bpd of American oil in the first six months of the year, preliminary data showed.
The cargoes due to arrive in July were purchased during a period of low prices amid the market share between Saudi Arabia and Russia. This means that Chinese importers bought the cargoes for well below the current WTI price of around $38/barrel.
China would spend about $7.36 billion for US crude imports if it continued imports at the current pace and prices. The $7.36-billion figure seems impressive, but it is far below Beijing’s pledge to increase purchases of US energy products by $52.4 billion over 2020 and 2021.
So far, only 7.04 million barrels (about 235,000 bpd) of US crude is expected to arrive in China in August. There is still a small window for traders to arrange August-arriving cargoes, but it will unlikely to increase significantly.
The outlooks on coal and LNG imports are also bleak. China has not purchased US coal since May and booked none for arrival in the coming months. China has so far received 285,600 tons of US coal worth approximately $40 million, with an assumed price of $140/ton.
Meanwhile, ten tankers carrying about 693,000 tons of US LNG arrived in China in April and May. But the arrival fell to only two in June with just one booked for July. Falling spot prices in China made US LNG less competitive compared to shipments coming from Qatar and Australia.
