Analysts Observe 11-year Low in Chinas Fuel Oil Import

Published Date : Jun 24, 2014

Data provided by the General Administration of Customers in Beijing, shows that China, which is the second-largest fuel oil importer in Asia, has cut back fuel imports by 60% in the last 11 years, reaching the lowest-ever import volumes recorded in the last 11 years.

China’s overseas purchases of fuel oil (a residual fuel obtained during the distillation of petroleum) dropped to 1.13 million metric tons in May 2014. This marks a 2.83 million ton dip from the same period the previous year. This is also the least since 2003. Till May 2014, China’s imports of fuel oil declined to 8.4 million tons, registering a 33% drop.

The small scale, independent refineries that operate in China’s eastern province of Shandong, are engaged in fuel crude and oil processing to produce diesel and gasoline. These firms, referred to as ‘teapot plants’ comprise over 50% of China’s fuel oil purchases. It is likely that many of these operators may be granted crude-oil imports in 2014, according to an official from the Energy Research Institute that works under the aegis of the National Development and Reform Commission.

According to oil analyst Angie Huang, teapot firms are gaining access to larger volumes of crude. Thus, it seems imminent that fuel oil will be increasingly replaced by crude.

Fuel oil imports in China may witness a further drop, touching nearly 1 million tons by June 2014, said Huang. Earlier, China had ceased purchases from Iran for the fourth month in a row, according to data available. The largest supplier was Singapore at 428,177 tons, with Venezuela coming a close second at 304,220 tons, while South Korea shipped nearly 179,969 tons of crude to China.