China’s crude oil imports fall for first time since 2001 | Business & Economics

The decline comes as Beijing cracks down on the refining industry to curb domestic overproduction of the fuel.

China’s annual crude imports fell 5.4% in 2021, the first decline since 2001, as Beijing clamped down on its refining industry to curb a domestic fuel glut and refiners shed massive inventories.

China has been a driver of global oil demand for the past decade It has accounted for 44% of the growth in global oil imports since 2015, when Beijing began issuing import quotas to independent refiners. Benchmark Brent crude fell slightly to $84.40 a barrel after the data.

China, the world’s largest crude oil importer, saw cargo volumes fall to 512.98 million tonnes (equivalent to 10.26 million barrels per day) from 542.39 million tonnes in the 2020s, data from the General Administration of Customs showed on Friday.

Reuters reported last year that imports by the world’s second-largest refiner had slowed as Beijing scrutinized tax evasion and irregular quota deals among independent refiners and cut fuel export quotas to limit crude processing.

Oil arrivals hit 46.14 million tonnes in December, marking the first monthly increase of nearly 20% year-on-year since April, as independent refiners scrambled to take advantage of 2021 quotas, customs data showed. Inflows in December were equivalent to about 10.87 million barrels per day, the highest daily volume since March.

The drop in 2021 compares with an average annual import growth rate of nearly 10 percent since 2015, according to Chinese customs data.

In 2020, companies undertook massive inventory building amid the lowest oil prices in decades and a rapid recovery in fuel demand from the early effects of the COVID-19 pandemic. But in 2021, refiners and traders have reduced inventories amid rising prices and slowing fuel demand growth.

‘Cooling hype’

“Rising crude prices, a ‘lagging’ market structure and the government’s overall strategy to cool down the hype in the commodity markets have combined to reduce crude oil imports last year,” said Mia Geng, an analyst at consultancy FGE.

In a backwardation market, spot delivery prices are higher than prices in the coming months, making companies reluctant to store oil.

Energy Aspects analyst Liu Yuntao estimated that 700 million to 90 million barrels of crude was drawn from storage throughout last year, including a rare public auction of the Strategic Petroleum Reserve in September.

Monthly imports fell for eight straight months year-on-year between April and November, as Beijing investigated import quota violations that led to a reduction in licenses for independent refiners.

Meanwhile, imports of natural gas, including pipeline gas and liquefied natural gas (LNG), rose 19.9% ​​year-on-year in 2021 to a record 121.36 million tonnes, customs data showed.

The growth accelerated from the previous year’s 5.3%, thanks to strong LNG purchases in China, which overtook Japan as the world’s largest buyer of ultra-cold fuel, especially in the first half of 2021.