China has accelerated crude oil imports in March and April, but the increased purchases this spring aren’t necessarily a sign of recovering fuel demand in the world’s biggest crude importer. It’s more likely that Chinese refiners are aggressively stockpiling cheaper crude amid uncertainties about sanctioned barrels going forward, analysts say.
In April, Chinese crude oil imports rose by 7.5% from a year earlier to 11.69 million barrels per day (bpd), China’s customs data show.
March also saw strong crude imports—Chinese imports topped 12 million bpd in March, the highest volume since August 2023, as flows of Iranian and Russian crude rebounded from the lows seen early this year with the U.S. sanctions.
However, the strong March and April crude imports signal continued stockpiling at Chinese refineries and strategic storage, rather than an acceleration in demand, according to estimates by Clyde Russell, a Reuters columnist.
Since China doesn’t report oil inventories, Russell has calculated the rate of stockpiling or stock draws based on official Chinese data of imports, domestic production, and refinery processing rates. These calculations showed that China likely stockpiled 1.74 million bpd in March, and continued stockpiling crude in April.
“Uncertainty and lower oil prices prompt aggressive stockpiling by Chinese majors, while sanctioned crude imports hold near record highs,” Emma Li, senior market analyst at Vortexa, wrote in an analysis last week.
Crude stock builds in China’s onshore tanks accelerated significantly through April. The average rate of stock builds exceeded 1.1?million bpd over the five weeks ending May 4, Vortexa’s data showed.
The surge in China’s seaborne crude imports in April “was initiated by concerns over potential supply disruptions amid tightening US sanctions, prompting Chinese refiners to ramp up bookings and bolster onshore inventories.”
Falling oil prices over recent months are likely to support and prolong this pattern, Li added.
The rate of utilization of crude tanks owned by China’s majors was 62% in April, which suggests ample capacity remains for further stockpiling. Inventory builds are expected to continue into the third quarter amid the ongoing seasonal refinery maintenance and strategic restocking, Li noted.
By Tsvetana Paraskova for Oilprice.com
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