The Chinese customs authority published data on crude Oil imports in May at the start of the week. Imports fell to a 4-month low of 46.6 million tons or 11 million barrels per day last month. In the previous month, they had still totalled 11.7 million barrels per day. The decline comes as no surprise, as we noted last Friday with regard to the significant drop in crude Oil processing in April. According to the Chinese consultancy Oilchem, 2.6 million barrels of daily processing capacity were shut in May due to maintenance work. According to the consultancy Kpler, refineries have therefore reduced their Oil supplies for May, Commerzbank's commodity analyst Carsten Fritsch notes.
Need to import crude Oil may also remain subdued
"In addition, Oil prices rose noticeably over the course of the month following a brief decline at the beginning of May, which is likely to have dampened buying interest. China's weaker import demand was also reflected in a significant reduction in official selling prices for Oil shipments in May by Saudi Arabia. Due to tighter US sanctions, independent refineries are also likely to have refrained from importing Iranian Oil, even if there is no official data on this from China. According to data from Bloomberg, Iran's Oil exports to China fell below the 1 million barrels per day mark for the first time in six months in May."
"At the same time, China also exported fewer Oil products in May. Exports amounted to 4.41 million tons. In the previous month, the figure was just over 5 million tons. In the previous year, it was almost 1 million tons higher. The last time exports of Oil products were at a lower level was in February. The customs authority will only publish detailed figures on specific Oil products at a later date. The lower exports are likely to be primarily due to reduced crude Oil processing."
"However, they may also indicate weaker demand in neighbouring Asian countries, which is making it more difficult for Chinese refineries to export excess Oil products. This would speak in favour of subdued processing margins in China and restrained crude Oil processing, even if the maintenance work has been completed. As a result, the need to import crude Oil would also remain subdued, which would weigh on Oil prices."
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