China's Oil, Gas Imports Strong in 2019 Despite Trade Dispute

PERSPECTIVE

By Clyde Russell

LAUNCESTON, Australia (Reuters) - China's imports of major commodities ended last year with a bang, with strong gains showing the appetite of the world's largest importer of natural resources remains robust despite the trade dispute with the United States.

Crude Oil

Once again the standout was crude oil, with December imports coming in at 10.78 million barrels per day (bpd), down slightly from November's record 11.13 million bpd.

The total for the year was 10.2 million bpd, up 9.5% from 2018 and the 17th straight year that annual imports have set a record high.

The increase in crude imports has been largely driven by the start up of two massive new refineries, with a combined capacity of 800,000 bpd, meaning that much of the increase last year was structural in nature.

However, it is also worth noting that storage flows into both commercial and strategic stockpiles were likely around 900,000 bpd, a strong figure that may not be repeated in 2020, especially if the strategic inventories are close to full.

A further factor was the increase in exports of refined products, which gained 14% to 66.85 million tonnes in 2019 from 2018, according to customs data.

Using the BP Plc conversion factor of 8 barrels of product per tonne, it means Chinese refiners exported about 1.46 million bpd of fuels such as gasoline, diesel and jet kerosene in 2019.

Natural Gas

Hot on the heels of crude as a top import performer came natural gas, with both pipeline and LNG arrivals totalling 9.45 million tonnes in December, the third-highest on record.

For 2019, natural gas imports rose 6.9% to 95.56 million tonnes, down from the 31.9% growth rate recorded in 2018.

The marked slowing in natural gas imports growth is somewhat deceiving as it was improbable that China could continue to increase its imports at the breakneck pace of recent years.

It is possible that 2019 becomes the new normal for China's natural gas imports, with 2020 likely to show reasonable growth, boosted largely by the ramp up of supplies from a new pipeline from Russia, as well as increased LNG re-gasification capacity.

Coal

Rounding off the energy complex is coal, and the very weak 2.77 million tonnes of imports in December can safely be ignored.

The low figure, around a tenth of the usual monthly total, is the result of cargoes not being cleared by customs in December in a bid to hold down 2019 imports to levels around the same as those in 2018.

Despite the effort, total imports for 2019 were 299.67 million tonnes, a smidgen below 300 million tonnes and 6.6% higher than the 281.23 million tonnes in 2018.

It is likely that coal imports will start the new year strongly, as the December arriving cargoes are cleared, and also as utilities and traders boost imports after winter weather disrupted the transport of domestic coal.

 

 

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