China's crude oil imports showed an annual fall of 11% at 46.45 million tonnes in June, extending the weakness after dropping 8.7% year on year in May, according to data from the General Administration of Customs of the People's Republic of China (GACC).
Nevertheless, the total crude imports in the first half of 2024 edged down merely 2.4% YoY at 275.50 million tonnes, and was up 5.25% from the five-year average, data showed.
Source: GACC
In other words, China's crude imports showed palpable drop primarily in May and June when the profits narrowed quickly. According to OilChem survey, the theoretical crude refining profits of domestic state-owned refineries and independent refineries in Shandong Province averaged Yuan 551/tonne and Yuan 287/tonne respectively in the first half, down 22.94% and 70.62% YoY partly due to high crude oil prices, especially varieties like Malaysia Blend which was quite popular among the independent refineries.
Meanwhile, the prices of refined oil were lower than expected amidst flat market demand, squeezing the profits of refineries.
But it is worth noting that the state-owned refineries maintained moderate profits in the first four months, supporting the crude consumption during the same period.
Source: Mysteel OilChem
Corresponding with the narrowing profits, the CDU capacity utilization rates of domestic refineries also experienced palpable fall, which averaged 71.03% and 55.66% in the first half for domestic refineries and independent refineries in Shandong respectively, down 1.54% and 7.31% from last year.
The CDU capacity utilization rates of independent refineries in Shandong dropped more obviously, and registered 50.92% by the end of June, the lowest in the first half.
Source: Mysteel OilChem
In this case, the port arrivals of crude oil in Shandong Province and Tianjin City imported by independent refineries and traders by shipping schedule were down 17.29% YoY at 45.43 million tonnes in the first half. Especially, the port arrivals fell drastically by 29% from last year at approximately 7.26 million tonnes in June 2024, falling more quickly than China's total crude imports.
Source: Mysteel OilChem
At the same time, the imports of heavy feedstock like bitumen mixtures faced the same dilemma in the first half, with an annual decline of over 26% at 3.92 million tonnes.
Looking ahead, though the traditional seasonal high in September and October is likely to offer certain support to refined oil consumption, the soft macro environment is projected to keep weighing on the entire market.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com