China boosts West African oil imports to offset trade war impact
LONDON (Bloomberg) -- China is set to boost its crude imports from West Africa to the highest in at least seven years this month as the trade war with the U.S. prompts the Asian nation’s refiners to find alternatives.
Chinese refiners have bought about 1.71 MMbpd of crude for October loading from West Africa, the most since at least August 2011 when Bloomberg started compiling the data, according to a survey of traders and analysis of loading programs. In total, Asia’s crude imports from West Africa in October will jump to 2.44 MMbpd, also a seven-year high.
The trade war with the the U.S. has cut China’s interest in buying shale oil which is similar in quality to West African crude. Unipec, the trading arm of top Chinese refiner Sinopec, recently put a plan to boost U.S. crude imports on hold. The impending return of sanctions on Iranian crude further limits the availability for Chinese buyers.
The majors in China need to “make up not only for lost U.S. grades, but more importantly for a cut in imports from Iran,” said Michal Meidan, an analyst at researcher Energy Aspects. Chinese refineries also need to replenish their crude stocks which are well below year-ago levels, she said.
Unipec bought about 30 MMbbl of West African crude for loading in October, the highest since at least August 2011, according to the survey. Other Chinese companies, including independent refineries, or teapots, also boosted their purchases. Teapot refineries typically increase their imports in the fourth quarter as they need to use up their crude import quota before it expires at the end of the year.
“After heavy maintenance over the summer and tight credit, they are now coming back to the market to try and exhaust their import licences for the year and to capitalise on strong margins as well as rising domestic product prices,” Meidan said.
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