China’s crude imports will rise further from a record this year to feed its expanding refining sector and strategic reserves, according to Standard Chartered Bank.
The nation’s average crude imports will rise by as much as 600,000 barrels a day this year, analysts including Priya N. Balchandani said in a March 24 report. Imports last month surged above 8 million barrels a day for the first time and exceeded volumes shipped to the U.S., the world’s top oil user, according to the bank. Standard Chartered expects China’s crude imports will top 10 million barrels a day by late 2018 or early 2019.
“Strong crude import growth accompanies a continuing build in China’s refining industry,” the analysts wrote in the report. “This expansion has combined with a build in strategic petroleum reserves to keep crude imports high.”
China took advantage of falling oil prices to fill strategic reserves, pushing imports 8.8 percent higher last year. The country is continuing its “relentless” drive to expand refining capacity as demand grows and the country relies on overseas supplies of liquefied petroleum gas, naphtha and fuel oil, the bank said.
Refining volumes will stay “robust” to satisfy growing gasoline and jet fuel demand in the world’s largest automobile market, the bank said. The country has boosted exports of diesel as slowing industrial production damps consumption.
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Average oil demand in the world’s second-largest crude consumer is expected to grow by 420,000 barrels a day this year, the bank said, adding that apparent oil product demand expanded 6.2 percent last year to 9.4 million barrels a day. China will account for 37 percent of global demand growth this year, Standard Chartered estimates.
China’s fuel pricing system will also support the expansion of crude imports and refining capacity, the bank said. China’s government decided late last year to stop lowering fuel prices when crude trades below $40 a barrel, supporting gasoline and diesel above levels where they would be trading internationally.
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