Currently, China is the world’s largest net importer of crude oil and the second largest oil consumer. Therefore, China’s imports have always been the focus of the oil industry. According to data released by the General Administration of Customs of China, China’s total crude oil imports from January to June 2020 were 260 million tons, a year-on-year increase of 9.9%. Among them, China imported 53.18 million tons of crude oil in June, a record high. Calculated based on the apparent demand for crude oil, in the first half of 2020, crude oil’s external dependence was 73%.
In detail, China’s crude oil imports increased from January to February 2020 compared with December 2019. Crude oil imports were 86.088 million tons, a year-on-year increase of 5.2%. Since then, domestic crude oil imports have been relatively stable. In March, 41.1014 million tons of crude oil were imported, a year-on-year increase of 4.5%. China’s crude oil imports declined slightly in April. China’s crude oil imports were 40.431 million tons, a year-on-year decrease of 7.5%. In March, a meeting between Saudi Arabia and Russia on production cuts broke up. Subsequently, Saudi Arabia started a price war, increased production and expanded exports, resulting in a rapid increase in crude oil supply.
At the same time, global public health events continued to spread, and crude oil demand fell off a cliff. Under the pressure of negative fundamentals of stronger supply than demand, crude oil prices continued to fall from March to April.
During May and June, China’s crude oil imports increased again. In May, 47.97 million tons of crude oil were imported, a year-on-year increase of 19.2%. In June, 53.18 million tons of crude oil were imported, a record high and a year-on-year increase of 34.4%.
On the one hand, in April, because OPEC and other non-OPEC countries did not reach an agreed production reduction plan, the price of crude oil fell sharply. China took advantage of the plunge in oil prices to purchase a large amount of crude oil, and these cargoes began to arrive at Chinese ports between May and June.
On the other hand, China’s crude oil production increased slightly in June, and processing volume accelerated. In addition, countries around the world continue to relax anti-epidemic blockade measures, and increased travel has raised market hopes for a recovery in fuel demand. The IEA also stated that the current world oil demand has not yet reached its peak, and that after the epidemic is over, crude oil demand will rebound significantly.
The substantial growth in China’s oil imports is largely driven by the growth of domestic economy and consumption. In the first half of 2020, China’s economy suffered a major impact due to the impact of the new coronavirus epidemic. However, currently, control of the epidemic has been relaxed and the economy has entered a state of recovery. According to data released by China Customs, in the first half of the year Foreign trade imports and exports were better than expected, with both exports and imports achieving positive growth in June. From this perspective, it also shows that the economy under the impact of the epidemic is slowly getting back on track.
As for crude oil imports in the later period, although downstream demand will rebound as the economy opens up, China’s crude oil imports may fall back to a certain extent in the short term. Currently, China’s ports have difficulty unloading and store all the crude it buys, so storage tanks along the coast are now nearly full and ports remain congested.
In order to alleviate this pressure, crude oil imports may be reduced. But in the long run, with the recovery of the economy, China’s domestic demand will further recover, and imports will still maintain a steady growth trend. </p
