China’s crude oil imports surge 8.8% in 2015

China’s appetite for crude oil remained healthy last year, with the latest data showing imports in December surging 9.3 percent from a year earlier to 33.2 million metric tons, but the country’s slowing economy will likely weigh on domestic demand for the fuel.

China’s total crude oil imports in 2015 rose 8.8 percent from the previous year to 335.5 million tons, China’s General Administration of Customs said Tuesday.

The government’s eagerness to fill up strategic petroleum reserves helped buoy imports, and local refiners have been taking advantage of weak oil prices to shore up inventories, analysts said.

Global oil prices have been battered for almost two years due a prolonged oversupply in the market. Prices are nearly 80 percent lower from their highs in mid-2008, and have fallen more than 18% since the beginning of the year.

“Product inventories are at seasonal lows and need to be rebuilt. This should keep crude imports high in first quarter of 2016,” said Laban Yu, an equity analyst at Jefferies.

However, some market observers said China’s slowing economic growth could result in weaker oil demand from the world’s second-biggest oil consumer. Last week, China said its economy grew 6.9 percent last year, the slowest pace in 25 years.

A downward revision by energy giant Exxon Mobil Corp. on its estimate for China’s annual energy demand growth highlights such fear.

On Monday, the company cut its forecast for annual energy-demand growth in China by almost a 10th to 2.2 percent a year through 2025. Over a decade, the revision amounts to more than Brazil’s current annual oil consumption. Exxon also predicts that China’s thirst for energy will peak by 2030.

A study issued last week by consultancy ESAI Energy also said China’s oil-demand growth rate between now and 2030 would be less than half that of the previous 15-year period.

According to Platts China Oil Analytics, the country’s crude imports may grow by 4.6 percent in 2016, much slower than last year’s 8.8 percent growth.

In the near term, analysts say China’s oil demand will hold up as the government is allowing more small and independent refiners to import crude oil. However, given that the domestic market is already flooded with refined products, Chinese refiners will likely seek to place their products in the export market, which could dent China’s need for imported oil products.

BMI Research said it expects China’s combined exports of diesel and jet fuel to increase by roughly 70 percent between 2016 and 2020.

In December, China exported 879,181 tonnes of gasoline, taking 2015 exports 18 percent higher to 5.9 million tonnes, according to the latest customs data.

Diesel imports in December fell 70 percent from a year earlier to 39,818 tonnes, and full-year imports fell 9.7 percent to 428,022 tonnes. Exports of diesel in 2015 rose 78 percent to 7.2 million tonnes, with 983,736 tonnes exported in December. The government didn’t provide 2014 figures for comparison.

In December, China’s kerosene imports fell 14 percent to 305,355 tonnes, and full-year imports fell 16 percent to 3.5 million tonnes. China’s fuel oil imports fell 39 percent to 1.2 million tonnes in December, and contracted 13 percent to 16 million tonnes in 2015.

Source: MarketWatch