BEIJING (Reuters) - China’s imports of crude oil eased in March from a record level hit in February but were the third highest ever, at 5.55 million barrels per day (bpd), as refiners in the world’s second-largest consumer rebuilt stocks.
Imports are, however, expected to slow further over coming months as oil firms start to take a breather from their recent restocking spree, while high oil prices restrain purchases.
China imported 23.55 million metric tonnes of crude, up 8.7 percent from a year ago but down from February’s record of 5.95 million bpd, preliminary data from the General Administration of Customs showed on Tuesday.
With a string of major refiners having already shut their plants for maintenance since March, the strong imports suggest refiners were rebuilding inventories following a steady decline in stocks since the fourth quarter last year.
Commercial crude oil stocks in China fell 3.77 percent by the end of February from a month earlier, official news agency Xinhua said last month.
Imports may also have been buoyed by government stockpiling, as China moves toward the completion of its second phase of strategic petroleum reserves, which have a total capacity of 170 million barrels.
However, shipments are expected to slow over the coming months, with a long list of the country’s top refiners having already shut their plants for scheduled maintenance.
“Fundamentally, Chinese demand, especially diesel and petrochemicals, does not support this pace of crude oil imports. Refiners will remain in the red importing at this price,” said a Chinese crude oil trader.
“$120 a barrel (for Brent) is a very high price. I don’t think there is a strong momentum to build stocks at this price,” he said, adding that the March shipments were mostly cargoes booked in the first half of February before prices spiked.
Despite the strong import figures, oil prices slipped below $122 on Tuesday, as the steeper than expected fall in China’s overall imports in March, which suggests slowing domestic demand, raised concerns about oil demand growth.
For the first quarter, crude imports rose 11.4 percent on the year to 5.66 million bpd, a pace much stronger than the rise of 6 percent for all of 2011, bolstered by new crude processing units started late in 2011 and run near full swing in recent months.
Refinery run poll:
China’s top oil refiners, including PetroChina and China Petroleum & Chemical Corp, were seen to have cut production in March to the lowest in 31 months on the back of poor margins, a Reuters poll showed.
They will trim crude oil throughput further to a 35-month low in April, a Reuters poll showed this week, as maintenance remains heavy amid ongoing refining losses despite a fuel price hike last month.
To help trim refiners’ losses, Beijing raised gasoline and diesel prices by 6 to 7 percent on March 20, in a second hike this year, which took fuel prices to a record high.
China’s net oil product imports were 1.86 million metric tonnes in March, up 43 percent from a year earlier and up 4.5 percent from February.
Diesel demand in China typically picks up in April during the spring planting season, with refiners building diesel stocks early in the year in anticipation of a large spring draw.
“Over January and February 2012, diesel inventories built by 560,000 bpd on average, which should be more than adequate to cover typical spring draws of some 200,000 bpd over March to May,” according to a JP Morgan research note on Monday
“We would not expect a spike in Chinese diesel imports.”
China will release refinery production data on Friday, with the final set of import and export data due on April 21.
Editing by Ed Davies and Clarence Fernandez