China regained its status from the U.S. as the world’s biggest crude oil importer as shipments surged to fill the Asian country’s strategic petroleum reserves.
Overseas purchases by China rose to 29.49 million metric tons in June, a 27 percent increase from May when shipments were the least since February 2014, according to preliminary data released by the Beijing-based General Administration of Customs on Monday. That’s equivalent to about 7.2 million barrels a day, Bloomberg calculations show. U.S. crude imports last month averaged 7.08 million barrels a day, according to data from the Energy Information Administration.
China’s crude imports rose as it began filling the second phase of emergency reserves in the eastern city of Qingdao that have a capacity of 3 million cubic meters (about 19 million barrels). Oil imports may climb in the third quarter from the previous three months as another storage site in the southern Chinese city of Huizhou is scheduled to open, ICIS China, a Shanghai-based commodity researcher, said July 1.
“Filling of the strategic reserves in Qingdao definitely played a part in the increase,” Amy Sun, an analyst with ICIS China, said by phone from Guangzhou. “China will overtake the U.S as a permanent top crude importer in a year or two.”
China’s crude imports in the first six months of the year grew by 7.5 percent, slower than the 10 percent pace in the same period of 2014, according to customs data. The country’s gross domestic product expanded by 6.8 percent in the second quarter, according to the median estimate of 39 economists surveyed by Bloomberg before official data released Wednesday. That compares with 7 percent in the first quarter.
“An important driver of strong crude imports has been filling for China’s Strategic Petroleum Reserve program,” Ivan Szpakowski, a Hong Kong-based analysts at Citigroup Inc., wrote in a report Monday. “The past nine months has seen the perfect storm of low oil prices with increased storage capacity.”
China overtook the U.S. as the largest crude importer in April for the first time this year. The country bought a record 7.4 million barrels a day from overseas that month, surpassing U.S. imports of about 7.3 million. Brent, used to price more than half the world’s oil, is little changed this year after tumbling almost 50 percent in 2014.
China may add 100,000 barrels a day of oil to strategic stockpiles this year and increase it to 200,000 barrels a day in 2016, PIRA Energy Group, a New York-based energy consultant, said in May. The government has filled four sites in the first phase with 91 million barrels of crude, the National Bureau of Statistics said on Nov. 20. The second phase, which includes the Qingdao and Huizhou sites, is designed to take in 168 million barrels, according to Gao Shixian, a deputy director at the National Development Reform and Commission’s energy research institute.
The nation’s crude processing is poised to climb 2.5 percent in the next three months from the previous quarter amid reduced refinery maintenance, ICIS China said on July 6.