China's Jan-Feb crude imports steady despite coronavirus disruptions

China's crude oil imports posted a 3.4% year-on-year growth for January and February, despite shrinking oil demand and refinery throughput levels amid the coronavirus outbreak that has wrecked havoc on the country's economic activity.

Chinese importers remain pessimistic about a recovery in oil demand and slowing purchases by refiners mean that official import data is likely to begin reflecting the impact of the coronavirus from March onwards.

China's crude oil imports averaged 10.52 million b/d for the January-February months, compared with an average of 10.16 million b/d over 2019 and 10.76 million b/d in December 2019, preliminary data from General Administration of Customs, or GAC, showed Saturday.

It did not publish separate data for January and reported combined data for January and February.

China's crude imports in January-February amounted to a growth of 3.4% year-on-year, which is a deceleration from the 12.4% increase in the same period in 2019, official data showed.

The slower growth can be attributed to the sharp increase in new refining capacity last year, and an expected moderation in China's oil import growth as demand saturates.

In January-February 2019, Chinese refiners had lifted crude feedstock deliveries significantly by around 900,000 b/d as new capacity kicked in.

GAC releases data in metric tons, which S&P Global Platts converts to barrels using a 7.33 conversion factor.

The country's crude imports in January-February totaled 86.09 million mt, 5.2% higher than the 81.83 million mt in the some period of 2019, preliminary GAC data showed.

CHINA'S OIL IMPORTS TO SLOW

Chinese refiners continue to pull back on throughput levels and crude purchases.

China's total refinery throughput slumped by around 3.3 million b/d in February from January to just over 10 million b/d, an S&P Global Platts survey showed in late-February.

That's close to a 25% month-on-month decline.

Several Sinopec refiners said on Friday that they had no confirmed throughput plan for the second quarter and had not started shopping for June deliveries yet.

They would typically have June purchases well planned out by late February/early March, but their scheduling has been complicated by the spread of the coronavirus outside China, to over 80 countries this week.

"I don't see a significant recovery in oil and petrochemical product demand soon as the coronavirus spreads widely overseas now, which will have an impact on overseas demand for Chinese goods," a Sinopec refiner said.

In coming months, China will require more flexibility on when to get crude delivery due to uncertainties of demand recovery, a Beijing-based analyst said.

Meanwhile, within China, quarantine measures have been tightened across administrative regions, causing logistical bottlenecks in road transportation and port discharges, a Shandong-based refiner said.

CHINA'S PRODUCT EXPORTS

China exported 10.75 million mt of oil products in January-February, slowing to a year-on-year growth of 16.6% from 21.3% in 2019, GAC data showed.

Export growth shrunk due to China's refining throughput cuts in February and fixed export plans that capped outflow despite a sharp drop in domestic product demand.

Traders and analysts expect China's oil product exports to hit record highs in March as demand struggles to recover and product stocks remain high despite refineries cutting production of jet fuel and gasoline production.

"China's gasoline exports can exceed 2 million mt in March based on the loading program so far this month," a Singapore-based trader said. China's gasoline exports last hit a record high of 1.84 million mt in November 2019.

"We have cut our jet fuel production from 70,000 mt/month to 20,000 mt/month, but the stock remains high as the barrels have nowhere to go. The gasoil yield is higher this month for more exports as a result of cutting the jet fuel yield" a Sinopec refiner said.

Gasoil exports last hit record high of 2.71 million mt in March 2019, while jet fuel was at 1.91 million mt in December last year.

S&P Global Platts Analytics estimated China's total oil demand will fall 10% year-on-year in the first quarter of 2020. GAC will release January-February export data breakdown by products on March 23.