China's record crude, coal, iron ore imports don't tell the whole story
The Hindu
China's record-high imports of crude oil, coal, and iron ore in 2023 come with limitations and uncertainties.
LAUNCESTON, Australia
China's imports of crude oil, coal and iron ore all soared to record highs in 2023, but this seemingly strong performance by the world's top commodity buyer comes with a few caveats.
Crude oil imports rose 11% in 2023 from the prior year to 11.28 million barrels per day (bpd), according to customs data released on Jan. 12. This eclipsed the prior record of 10.81 million bpd from 2020, and came as China re-opened its economy after ending its strict zero-Covid policy at the end of 2022. But is the gain in crude oil imports as impressive as it first appears?
In volume terms, 2023's arrivals were 1.11 million bpd higher than those in 2022. However, this is well below the forecast for a 1.8 million bpd increase in China's oil demand from the International Energy Agency (IEA). Of course, imports and total demand aren't the same thing, but looking at the other factors at work in China's crude oil market doesn't offer much support to the bullish view.
China's domestic oil production was only slightly higher, rising 1.8% in the first 11 months of 2023 compared to the same period a year earlier. The country is also continuing to add crude to either commercial or strategic inventories, with an estimated 6,70,000 bpd flowing to storage tanks in the first 11 months of the year.
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. In the first 11 months, the total available crude was 15.45 million bpd, while refinery throughput was 14.78 million bpd.
The volume being stored is slightly down on the 7,40,000 bpd added to inventories in 2022, but it still shows that China's refineries were building stockpiles, especially in the first half of 2023, rather than buying crude because domestic consumption was strong.