SINGAPORE (Reuters) - China’s appetite for crude oil is expected to pick up later this year as storage comes online and new buyers emerge, even after its inbound shipments surpassed United States imports last month for the first time, analysts and traders say.
China’s crude oil imports hit a record 7.37 million barrels per day (bpd) in April, making it the world’s biggest importer for the commodity last month.
And despite slowing economic growth, China’s crude purchases are expected to keep climbing in second-half 2015, supporting oil prices that have rebounded about 40 percent since touching six-year lows earlier this year due to a supply glut.
China is building vast new oil storage caverns to house an expanded strategic petroleum reserve (SPR), keeping imports high despite slower domestic demand.
Consultancy Energy Aspects says Chinese SPR caverns with a capacity of 132 million barrels could contain up to 100 million barrels in the second half of this year.
SIA Energy expects two new strategic storage facilities - in Jinzhou and Tianjin - with total capacity of about 50 million barrels to be completed in the fourth quarter.
Chinese refiners are expected to rebuild crude stocks pulled down by months of high refining rates, and will begin to fill new commercial storage tanks with a total capacity of nearly 40 million barrels that will come online this year.
“Even though China’s GDP growth is stalling, its crude appetite may swing upwards in H2 15,” said Amrita Sen, Chief Oil Analyst at Energy Aspects.
An oil trader with a Chinese state company agreed:
“I expect to see higher commercial inventory levels,” the trader said on condition of anonymity.
“Everybody is expecting higher oil prices toward the end of the year, so naturally there will be inventory (build),” he said, as refiners buy crude before it gets more expensive.
Fresh demand from independent “teapot” refiners, which account for a fifth of China’s refining capacity, could also add to imports.
The country’s biggest private refiner, Shandong Dongming Petrochemical Group, expects to get approval in the third quarter to start importing about 100,000 barrels per day.
Adding to China’s import needs is a potential dip in domestic output this year of about 120,000 bpd, forecast by researchers at Wood Mackenzie as companies cut capital spending.
The outlook for crude imports contrasts with slowing economic growth in China, where oil demand is forecast by the International Energy Agency to grow 2.7 percent in 2015, down from double digit growth at the beginning of the decade.
Last year, China’s crude imports grew 9.5 percent over 2013, boosted by a late-year surge as it bought cheap oil for strategic storage.
Editing by Tom Hogue and Christopher Johnson