A general view of a crude oil importing port in Qingdao, Shandong province, November 9, 2008. A Chinese industry body said it could review rules covering the import of crude by new entrants after a private refinery failed to secure financing for 1.5 million barrels of crude it bought, in a blow to Beijing's moves to open up its… Acquire Licensing Rights
LAUNCESTON, Australia, Oct 2 (Reuters) – Asia's crude oil imports slipped for a second consecutive month in September as refinery maintenance trimmed demand and the impact of higher prices started to weigh.
The world's top importing region saw arrivals of 24.95 million barrels per day (bpd) in September, down from August's 25.22 million bpd, according to data complied by LSEG.
September's imports were also almost 3 million bpd weaker than the 27.92 million bpd seen in July, which was the highest monthly total so far in 2023.
Imports in August and September have been the lowest two months so far in 2023, according to LSEG data.
There are two main reasons behind the lower imports, with the temporary factor being seasonal refinery maintenance, which starts in September and lasts through October.
Among the refineries currently undertaking scheduled maintenance are units at Reliance Industries' (RELI.NS) 1.24 million bpd complex in Jamnagar in India, Vietnam's Nhgi Son plant, SK Energy's Ulsan refinery in South Korea and Taiwan's CPC.
Refiners tend to increase utilisation rates ahead of regular maintenance to build up stocks of products, but then trim crude purchases for the turnaround period.
The other factor behind lower crude imports in September is likely the increase in oil prices, which gathered steam from July onwards after leading OPEC+ member Saudi Arabia said it would voluntarily cut its output by 1 million bpd.
Brent crude futures rallied from a low of $71.57 a barrel on June 28 to a high of $97.69 on Sept. 28, an increase of 36.5%.
The drop in September crude imports in Asia may only be the start of the demand response to the surge in oil prices, given that cargoes that arrived last month were likely arranged in July, just at the start of the recent rally.
It's possible that higher oil prices will see lower imports in the fourth quarter, especially since retail prices for fuels such as diesel and gasoline have risen by more than the jump in crude prices, given the robust profits margins for refining fuels and the U.S. dollar's strength, which lifts costs in other currencies.
The main unknown factor for Asia's crude demand is China, the world's biggest importer of the fuel, which is also believed to have large stockpiles of crude built up when prices were lower.
China added about 1.32 million barrels per day (bpd) to either commercial or strategic crude stockpiles in August, according to calculations based on official data.
For the first eight months of the year China added about 810,000 bpd to inventories, or a total of about 197 million barrels.
China doesn't disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.
China imported 11.53 million bpd in September, down from August's 12.49 million bpd, according to LSEG data.
The strong builds in inventories so far in 2023 in China give its refiners the option to trim imports while still boosting fuel exports to take advantage of the high profit margins on refined products, especially diesel.
What is also clear is that China is attempting to maximise its imports of discounted crude oil from Russia and Iran, while minimising its intake of more expensive oil from Saudi Arabia.
Russia was China's top supplier in September, providing 1.81 million bpd, eclipsing the 1.44 million bpd from Saudi Arabia.
India, Asia's second-biggest importer, is also increasing its imports of Russian crude, with arrivals of 1.53 million bpd in September, up from 1.38 million in August, according to LSEG data.
The increased imports from Russia come despite the discount narrowing to around $4 to $5 a barrel from $5 to $6 the prior month.
The main question for Asia's oil demand in the fourth quarter is just how hard the recent price rally will bite demand.
Higher fuel prices are likely to reignite inflation, meaning central banks may restart raising interest rates or delay any cuts, factors that are likely to strike at consumer confidence and spending.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by Jamie Freed
Our Standards: The Thomson Reuters Trust Principles.
Thomson Reuters
Clyde Russell is Asia Commodities and Energy Columnist at Reuters. He has been a journalist and editor for 33 years covering everything from wars in Africa to the resources boom and its current struggles. Born in Glasgow, he has lived in Johannesburg, Sydney, Singapore and now splits his time between Tasmania and Asia. He writes about trends in commodity and energy markets, with a particular focus on China. Before becoming a financial journalist in 1996, Clyde covered civil wars in Angola, Mozambique and other African hotspots for Agence-France Presse.
Two people were killed when a tree crushed their car as hurricanes with winds reaching 38 metres per second hit several regions in Russia's Siberia on Sunday.
Russian drones hit infrastructure facilities in Ukraine in an overnight assault that caused power outages in more than 400 towns and villages in the south, southeast, and north of the country, Ukrainian officials said on Saturday.
Sri Lanka will call for expressions of interest (EOI) in setting up nuclear power plants, its energy minister said on Friday, as it seeks cheap electricity to support its economic recovery.
The German government is still planning to buy the local division of Dutch grid operator TenneT, an economy ministry spokesperson told Reuters on Sunday.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2023 Reuters. All rights reserved
Asia's crude oil imports slip in Sept as price hike bites – Reuters.com
Leave a comment