China's 2019 crude imports up 9.5%, gas import growth slows

Singapore — China's crude oil imports rose 9.5% in 2019 to a average 10.16 million b/d, but growth was marginally slower than the 10.1% rate posted a year earlier, preliminary data released by the General Administration of Customs showed.

S&P Global Platts Analytics attributed the growth in imports to relatively higher crude oil import quotas of 159.74 million mt, up 13.8% year on year, with independent refining complexes Hengli Petrochemical (Dalian) and Zhejiang Petroleum & Chemical (ZPC) fully starting facilities.

Platts Analytics expects China's crude imports to grow by 530,000 b/d in 2020, a 5.2% year-on-year increase.

The country's crude imports in December totaled 45.48 million mt, 0.6% lower than November, the data showed. On a barrels-per-day basis, China's crude imports hit a high in November of 11.18 million b/d.

Fuel oil imports in December soared 92% month on month to a six-year high of 2.03 million mt ahead of IMO 2020—the lower sulfur cap on marine fuel globally that came into force January 1. The volume represented a 34.5% year-on-year increase.

Analysts and market sources attributed the surge in fuel oil imports to heavy inflows of both low-sulfur fuel oil and high-sulfur fuel oil due to strong demand from both bunkering and refining sectors.

"China took more VLSFO for bonded bunkering ahead of IMO 2020," a fuel oil trader said. "Moreover, HSFO became cheaper due to shrinking demand from the bunkering sector, prompting some teapot refiners to return to the market for the competitive feedstock."

S&P Global Platts data showed the average price for FOB Singapore 0.5%S marine fuel was $569.77/mt in December, up $73.98/mt from November.

China's average fuel oil import price was Yuan 3,457.94/mt in December, up Yuan 197.07/mt ($28.6/mt) from November, GAC data showed.

China's oil product exports rose 14.1% year on year to 66.85 million mt in 2019, although outflows in December retreated 7.1% to 6.79 million mt from a historical high of 7.31 million mt in November, according to GAC data. In 2018, China's oil product exports rose 12.3% year on year to 58.6 million mt.

Sinopec's Economics & Development Research Institute expects a narrower 7% year-on-year increase in China's oil product exports in 2020.

China's gas imports

China imported 9.51 million mt of natural gas in December 2019 and 96.56 million mt for the whole of 2019, up 3% and 6.9% year on year, respectively, latest data GAC data showed.

The year-on-year growths shrank significantly from the 17.5% expansion in December 2018 and 31.9% increase in 2018 due mainly to slower market demand amid higher domestic gas production, market sources said.

China's natural gas demand has been slowing since early 2019 due to a combination of factors, including an economic slowdown, softer coal-to-gas switching policy, adjustment of electricity policy and stricter emission restrictions, market sources noted.

China's industrial production growth came in at just 5.6% year on year in the first 11 months of 2019, compared with 6.3% in the same period last year, data from the National Bureau of Statistics showed.

China's gross domestic product growth rate continued to slow in the third quarter last year at 6%, compared with 6.4% in Q1 and 6.2% in Q2, according to the NBS data.

Apart from weak demand, higher domestic production is believed to have also curbed LNG imports in 2019, market sources said.

China is estimated to have produced 173.3 Bcm of natural gas in 2019, up 9.6%, or 15.2 Bcm, from the previous year. In 2019, gas output reached a record high. The annual increase in volume was the largest in the past 10 years, according to the latest data from CNPC ETRI.

CNPC, or PetroChina, which produces nearly 70% of China's total gas output, said it registered the largest annual increase in natural gas production in 2019.

PetroChina's Changqing Oilfield, the largest gas field in China, produced 41.2 Bcm of natural gas in 2019, up 2.5 Bcm, or 6.4%, from 2018, while its Southwest oil and gas field produced 27.9 Bcm of natural gas in 2019, up 4.2 Bcm, or 18.6%, from a year ago, according to company data.