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January 10, 2014 5:17 am
Chinese imports of crude oil grew by the least in almost a decade in 2013, new government data show, posing a challenge to exporters from the Middle East to Africa who are competing to sell more oil into the world’s second-largest economy.
Last year imports averaged 5.64m barrels a day, an increase of 216,880 b/d, or just under 4 per cent from 2012, according to customs data released on Friday. That was the lowest annual growth since 2005 and a fraction of the record increase in 2010, when import growth topped 700,000 b/d.
Ravenous demand for oil from China’s fast-industrialising economy has helped push oil prices to record levels over the past decade. But signs of moderating import growth in China mean exporters will depend on stronger growth elsewhere – or supply disruptions – to support the global oil prices.
“Exporters can no longer depend on China sucking up all of their excess crude,” said Amrita Sen, an analyst at Energy Aspects in London.
China has more than doubled imports of crude oil since 2005 as oil demand growth slowed sharply in developed economies. Last year the country displaced the US as the world’s single largest importer.
But China’s economic growth is beginning to slow, while the focus on energy-intensive manufacturing is also fading.
China also has moved from being a net importer of diesel – a key industrial fuel – to a regular exporter. As a result the need to build new refineries, which encourage more imports, has also become less urgent.
Some projects have been delayed. The full start-up of Sinochem’s Quanzhou refinery, which was expected to consume large volumes of Iraqi crude, was pushed back from 2013 into this year.
“Markets in Asia are generally not as short diesel as they were in the past. That means China doesn’t need to grow crude processing as much to meet local demand,” said Adam Longson, an analyst at Morgan Stanley.
However, oil traders say China’s underlying demand for most oil products continues to grow and suggest that some one-off factors depressed imports last year: the government is thought to have purchased little crude for its strategic reserve, while an explosion in Qingdao, a key port, disrupted crude flows in November.
December crude imports hit a record high of 6.31m b/d, due in part to deferred shipments from the previous month.
Nevertheless, traders concede, China’s shift to consumer-driven growth is unlikely to produce the significant annual leaps in imports that have typified the past decade and encouraged exporters to focus their strategies on China.
Exports to China from the former Soviet Union have more than doubled since 2008, while Middle Eastern exports have climbed 50 per cent. Iraq is hoping to export 850,000 b/d to China this year, more than a quarter of its entire output.
The deceleration in Chinese import growth comes as the US is meeting more of its needs from domestic resources, while European demand remains sluggish.
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