China march crude imports drop to 5-mth low

Reuters - China's crude oil imports in March fell to a five-month low, official data showed on Thursday, dropping to less than 6 million barrels per day (bpd) after three months of high inbound shipments and gains in fuel product inventories.

And while the imports were up 2 percent compared to the same month a year ago as state-oil firms started up larger term contracts with suppliers such as Iraq and Russia, analysts said the shipments may drop further in the second quarter as refineries enter a peak maintenance season.

The world's top energy consumer took in 23.52 million tonnes, or 5.54 million barrels per day (bpd), of oil in March, according to the General Administration of Customs, down 7.8 percent on a daily basis from 6.01 million bpd in February.

China's crude imports had held at more than 6 million bpd over the December-February period, hitting a record high 6.63 million bpd in January. But oil product inventories surged over the same period, indicating real demand was soft - underlined by China turning net oil product exporter in March for the first time since January 2010, according to a Citi research note.

"China's crude imports fell in March from the previous two months as demand recovered more sluggishly than usual after the Chinese New Year holidays and as refineries were likely wary of high product stocks," Barclays analyst Sijin Cheng said.

"As some major refineries will have scheduled maintenance in April to May, crude runs and imports are likely to remain muted in early second quarter," Cheng said.

Sinopec Corp shut down its 160,000-bpd Changling refinery for maintenance from late March, the company has said.

PetroChina Co Ltd plans to shut down its 410,000-bpd Dalian refinery for about two-month overhaul in April-May.

China's crude imports were also lower last month compared to the few months previous amid continued worries about economic growth in the world's second-largest economy.

The country's overall exports unexpectedly fell for the second straight month in March and imports dropped sharply, intensifying concerns about weak manufacturing.

Together, the oil and trade data helped to undermine a two-day rally in oil prices, with Brent dropping back as much as 50 cents after the customs report was released.

"We are seeing a further pull-back in oil because China's trade numbers fell short of expectations," said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.

"Overall, crude import numbers seem healthy and it shows that oil demand is still there, but oil is just one side of the story," he said.

In the first quarter of this year, China's crude imports rose 8.3 percent from a year earlier to 74.72 million tonnes, or 6.06 million bpd, the customs data showed.

Gasoline stocks surged 10.4 percent by the end of February from a month ago, while diesel stocks jumped 20.5 percent over the same period as demand fell in the first two months of the year, the official news agency Xinhua has reported.

Higher oil prices last month, with Brent hitting a two-month high above $112 a barrel on the escalating tensions between Russia and Ukraine, also curbed buyers' appetite.

China's crude intake in March was the lowest since imports dropped to a 13-month low of 4.81 million bpd last October.

China's refined fuel exports were 2.74 million tonnes in March, while fuel imports were 2.37 million tonnes, leaving net oil product exports at 370,000 tonnes, customs data showed.

"This is only the third time since data began in 2004 that China has been a net (oil product) exporter, with the others coming in December 2009 and January 2010," Citi said in its research note.