Singapore — China's crude oil imports from Saudi Arabia soared 94.9% year on year to 9.17 million mt, or 2.17 million b/d, in May, a new record high for a single producer's supplies in a month, data from China's General Administration of Customs showed on June 26.
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The last record high was 2.06 million b/d or 8.41 million mt, which was also set by Saudi Arabia in October 2019, GAC data showed.
The Saudi crude flood was within expectation as the listed Saudi Aramco slashed the prices of its crude exports for April, including the biggest cut ever for Arab Light crude by $6/b for Asia in early March, which attracted heavy buying from China in late March.
These barrels were scheduled to be delivered in May.
The flow from the OPEC kingpin will remain high in June as it further cut its OSP for May-loading cargoes.
But rising international benchmark prices, combined with the sharp hike in Saudi Aramco's official selling prices for June and July loading cargoes, could put the brakes on China's buying in the third quarter, industry officials and market sources say.
Saudi Aramco on June 7 set the OSP differential for its Arab Light crude headed to Asia at plus 20 cents/b against the average of the Dubai and Oman benchmarks over July. That is up $6.10/b from the June price and far above the $2-$5/b increase traders had expected, according to an S&P Global Platts survey.
OPEC'S SHARE RISES TO 53%
Not only Saudi Arabia, but also other producers from the Middle East significantly raised their shipments to the world's top crude importer in May.
As a result, crude imports from the oil-rich region surged 57% on the year to 6.06 million b/d, accounting for 53% of the crude deliveries to China in May, GAC data showed.
By comparison, Middle East took only a 41% of share in May 2019 and 46% in April.
But in contrast to Saudi Arabian crude, the main buyers of which are state-owned oil giants, independent refineries were the main contributors to the surge in crude imports from other Middle Eastern producers.
Independent refineries imported 2.39 million mt of Iraqi crude in May, more than tripling by growing 1.69 million mt from a year earlier, S&P Global Platts data showed.
Therefore, crude imports from Iraq, the third largest crude supplier to China, jumped 54.7% or 2.46 million mt year on year to 6.96 million mt in May, GAC data show.
The same applies to Upper Zakum, Murban from UAE, as the sector lifted imports from the producer by 275.8% year on year to 1.49 million mt, Platts data show.
This pushed UAE to become the fourth largest supplier to China with imports more than quadrupling to 3.25 million mt in May, taking it from sixth place in April and 15th in May 2019, according to GAC.
IMPORTS FROM US RESUME
US crudes flowed into China in May again after a five-month suspension. However, the import volume fell 30.1% year on year to 549,839 mt or 130,010 b/d.
The first US cargo in May was Alaska North Slope, taken by independent refineries Shenchi Petrochemical and Luqing Petrochemical, according to Platts data.
The sector totally got 345,000 mt of deliveries from US in May, including Mars and WTI Midland in addition to ANS, becoming the main receiver of the US barrels in the month.
"May is just a start, arrivals will gradually go up in June, and more will come in July," a Shandong-based independent refiner said.
In March, Chinese independent refiners took at least two cargoes of US sour crude grade Mars at a discount of $8-$9/b to ICE Brent for July delivery into China, refining sources said.
State-owned companies Unipec and PetroChina became more active in taking US crude in April when crude prices slumped due to weak demand and oversupply due to the coronavirus pandemic.
Trade flow tracker Kpler showed that US crude arrivals to China would hit a record high of 865,000 b/d in July, from 118,000 b/d in June.
China has 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 than in 2017, with expectations of similar levels through 2025.
The deal covers crude oil, LNG, refined products and coal, of which crude oil and LNG are expected to comprise the bulk of the purchases as they are the most traded and have the largest market in China.
China's top crude suppliers
(Unit: '000 mt)
Note: * include other suppliers