China’s crude oil imports drop for first time since 2001 | Business and Economy

The decline comes as Beijing pressures the refining sector to reduce excess domestic fuel production.

China’s annual imports of crude oil fell 5.4 percent in 2021, declining for the first time since 2001, as Beijing stressed the refining sector to reduce domestic fuel overproduction while refineries drew down huge stocks.

China has been the global driver of oil demand over the past decade and has accounted for 44 percent of global growth in oil imports since 2015, when Beijing began issuing import quotas to independent refineries. The benchmark Brent crude index weakened slightly to $84.40 a barrel in the wake of the data release.

And data from the General Administration of Chinese Customs showed that shipments as the largest importer of crude in the world fell to 512.98 million tons (equivalent to 10.26 million barrels per day) from 542.39 million tons in 2020.

Reuters news agency reported last year that imports to the world’s No. 2 refiner had slowed as Beijing examined tax evasion and erratic quota trading among independent refineries and also reduced fuel export quotas to restrict crude processing.

Customs data showed that the arrival of oil in December amounted to 46.14 million tons, an increase of about 20 percent in the first month-on-year growth since April, with independent refineries rushing to benefit from the 2021 quotas. The December flow, equivalent to about 10.87 million barrels per day, was higher Daily intake since March.

The decline for 2021 compares to an average annual import growth rate of nearly 10% since 2015, according to Chinese customs data.

In 2020, companies set out on a massive stock-building drive amid the lowest oil prices in decades and a rapid recovery in fuel demand from the early impact of the COVID-19 pandemic. But in 2021, refiners and traders cut stocks amid rising prices and slowing fuel demand growth.

“noise cooling”

“Rising crude oil prices, the ‘backward’ market structure and the government’s overall strategy to calm the hype in the commodity market all worked together to reduce crude oil imports last year,” said Mia Jing, an analyst at consultancy FGE.

In a lagging market, prices for spot delivery are higher than those in the coming months, which discourages companies from stockpiling oil.

Liu Yuntao, an analyst at Energy Aspects, estimated that 70-90 million barrels of crude oil were pulled from storage over the past year, including a rare public auction of strategic petroleum reserves in September.

Monthly imports posted year-on-year declines for eight consecutive months between April and November, as Beijing investigated the erratic trade of import quotas that led to cutbacks in permits for independent refineries.

Meanwhile, imports of natural gas, including pipeline gas and LNG, increased by 19.9 percent in 2021 compared to the previous year, reaching a record high of 121.36 million tons, customs data showed.

The growth, accelerating from the 5.3 percent increase in the previous year, was supported by China’s strong LNG purchases, especially in the first half of 2021, which saw Japan jump as the world’s largest buyer of ultra-cooled fuels.

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