NEW REFINERIES
It's likely that some of the oil heading for storage will go
to build working inventories for new plants expected to be
commissioned this year.
Two new refineries - PetroChina's Guangdong Petrochemical
and Jiangsu Shenghong Petrochemical with a combined capacity of
520,000 bpd - are expected to enter commercial operation in the
coming months, industry sources said last month.
A third new plant, Shandong Yulong Petrochemical's 400,000
bpd project, may also begin crude imports for possible test runs
by the end of the year, a company source told Reuters.
Flows in, or indeed out of, either commercial or strategic
reserves are the biggest X-factor for China's crude oil imports.
The assumption of modest inventory builds as part of the
commissioning of new refining units is a safe choice, but it's
worth noting that China's refiners and the authorities in
Beijing tend to use stockpiles to smooth out prices, even if
they don't talk about this in public.
Imports could rise by more than expected if crude oil prices
drop and remain low, a situation that is possible if the world
economy goes into recession, or a banking crisis ensues after
the collapse of two U.S. lenders and the forced sale of Credit
Suisse.
Conversely, if global oil demand growth is robust and prices
head higher, Chinese refiners may choose to reduce imports and
dip into their reserves.
Another factor that isn't subject to market imperatives is
the level of fuel exports, which is set by the government
through the issuing of permits.
Exports of refined products ramped up in recent months as
Beijing sought quick economic stimulus and allowed refiners to
take advantage of strong margins in Asia for fuels, especially
diesel.
But there is no guarantee this policy will persist over the
whole of 2023, and if domestic demand does rebound, then it's
likely fuel exports will be curbed.
The opinions expressed here are those of the author, a columnist
for Reuters.
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GRAHPIC-China's crude oil imports seen rebounding: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Jacqueline Wong)
(Repeats story published earlier with no changes to text)
By Clyde Russell
LAUNCESTON, Australia, March 28 (Reuters) - China's
crude oil imports will average 10.8 million barrels per day
(bpd) in 2023, matching the previous record high from 2020,
according to the think tank of the country's leading energy
group.
Imports will rise 6.2% from last year to 540 million tonnes,
while refinery processing will gain 7.8% to 733 million tonnes,
equivalent to 14.66 million bpd, China National Petroleum
Corporation's Economics and Technology Research Institute (ETRI)
said in its annual industry outlook released on Monday.
The forecasts are largely in line with those of private
analysts, who have tipped a rebound in China's fuel consumption
as the world's second-largest economy reopens after ending its
strict zero-COVID policy late last year.
The ETRI forecast is for crude oil imports to rise by
630,000 bpd in 2023, which is below the 900,000 bpd expected by
the International Energy Agency, but above estimates from some
analysts, such as Wood Mackenzie and S&P Global Commodity
Insights.
Forecasts are useful insofar as they provide insight into
the expectations of participants in the market, but it's also
useful to look at some of the risks around the estimates.
What is interesting with the ETRI forecasts is that they
would seem to show that China's refiners are still expecting to
add crude oil to stockpiles over 2023.
Assuming domestic oil production remains relatively steady
over 2023 at the 4.23 million bpd achieved in the first two
months of the year, it implies that a total of 15.03 million bpd
will be available to refiners from imports and local output.
This is some 370,000 bpd more than the ETRI forecast for
refinery throughput of 14.66 million bpd.
If these sort of volumes are added to inventories in 2023,
it would be lower than the 740,000 bpd added to storage tanks in
2022.
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.
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