While China’s January to May 2022 seaborne crude oil imports are down 2.2% y/y, a 51.4% m/m boost in imports from Russia has helped lift China’s seaborne crude imports to 42.6 million tonnes in May, up 8.7% m/m and 13.0% y/y.
Russian crude oil accounted for 13% of China’s seaborne crude import in May, up from 9% earlier in the year. Meanwhile, imports from Brazil, Saudi Arabia, and Kuwait declined compared to April.
While year-to-date seaborne and total crude imports are down 2.2% y/y and 1.7% respectively, the US Energy Information Administration (EIA) estimates that local Chinese crude production was up 3.4% y/y whereas consumption is estimated to be down 0.9% y/y. Refinery runs have also been low as local demand has faltered and the export quota in 2022 is 37% lower than in 2021. All in all, crude inventories have been on the increase and hit a 10-month high in May.
The EIA still estimates that oil consumption in China will rebound and grow 2.7% y/y from June until the end of December. It also forecasts a 1.2% rise for the full year compared with 2021. This bodes well for crude tanker volume demand, but risks related to global economic growth remain.
Changes in crude oil trade patterns are expected to accelerate during the rest of 2022, particularly towards the end as the EU’s ban of Russian oil and oil products enters into force.
Russia will seek to increase volumes to India and China, and they are likely to replace volumes from the Persian Gulf, Brazil, and West Africa. Those volumes will instead move towards Europe, depending on final trading patterns this could increase average sailing distances and demand for Afra- and Suezmax ships in particular. This is because they carry most of Russia’s exports as well as a higher share of volumes from the Persian Gulf, Brazil, and West Africa into Europe than into India and China.
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