CHINA DATA: Sep US crude imports hit record high but purchase value lags target

Singapore — The US became China's fourth biggest crude supplier in September in terms of volume, and inflows from the producer is expected to be ample in the fourth quarter as the Phase 1 trade deal between Beijing and Washington provides impetus to the flow of crude and energy products into China.

However, low crude oil prices will continue hindering Beijing's 2020 energy purchase targets and temper the impact of heightened flows, particularly when translated into value terms.

Crude oil is considered a key product to complete China's annual energy purchase commitments due to the commodity's typically higher value and volume compared with other energy products.

According to the Phase 1 trade deal struck in January, Beijing had committed to buy $18.5 billion more of US energy products in 2020 than it bought in 2017, and $33.9 billion more in 2021 over 2017 levels, with expectations of similar levels through 2025.

China's crude import volume in September surged 75.3% month on month to a record high of 3.9 million mt, or 952,254 b/d, showed data from the General Administration of Customs, or GAC, on Oct. 26.

The previous high was at 3.67 million mt, or 866,793 b/d in July, according to GAC data.

The import volume was within expectations as Sinopec took a majority of the arrivals while CNOOC, Zhejiang Petroleum & Chemical as well as independent refineries in Shandong also received shipments from the US, S&P Global Platts reported.

After a slight month-on-month contraction in October, China's crude imports from the US is likely to hit 908,000 b/d in November, data intelligence firm Kpler said on Oct. 26.

VOLUME UP, VALUE LAGS

The September volume brought imports from the US at 10.92 million mt, or 292,236 b/d in January-September, more than double from 5.18 million mt in the same period of last year.

However, the value of the US crude imports in the first three quarters was merely $3.32 billion, translating into an average CFR price of $41.51/b with a conversion of 7.33 barrels/mt, according to GAC.

In comparison, China in 2017 imported about 153,000 b/d of US crude oil that was worth $3.2 billion at an average price of about $57.59/b, GAC data showed.

"Due to low crude price, it is unlikely to meet the trade deal, despite China increasing purchases and the monthly volumes keep hitting highs," a Beijing-based analyst said.

SAUDI ARABIA RETURNS TO TOP

Crude imports from Saudi Arabia rebounded 48% from August at 7.78 million mt, or 1.9 million b/d, in September after a three-month-fall.

The strong recovery led to its return to the top spot in September.

Moreover, China also boosted crude imports from the Middle East, with shipments jumping 18.9% year on year at 5.16 million b/d in the first three quarters. The Middle East accounted for 46.3% of the market share compared with 43.8% in the same period last year.

In contrast to notable volume increases from the Middle East and North America, imports from Africa and South America fell 12.4% and 8% at 1.6 million b/d and 1.27 million b/d, respectively, in January-September, GAC data showed.

China's top crude suppliers ('000 mt):

Source: General Administration of Customs