Bingo! China’s Oil Imports Surging!

Seems like my sources in Asia are right on the money. Check this out …

China crude imports leap 25 pct, fastest in 10 mths
Reuters, Wednesday, June 11 2008

BEIJING, June 11 (Reuters) - China’s crude oil imports leapt by 25 percent in May to their second-highest ever, reversing a rare fall the month before as refiners restocked supplies and stepped up runs to keep fuel flowing ahead of the Olympics Games.

Fuel imports by the world’s second-largest oil consumer also jumped last month, reflecting robust demand in one of the only big Asian countries where pump prices haven’t risen this year.

May crude imports rose about 10 percent from April to 3.81 million barrels per day (16.2 million tonnes), a rate second only to March’s 4.07 million bpd, data showed on Wednesday. The growth was the strongest in 10 months, and appeared in line Morgan Stanley’s argument last week that stronger Asian demand was drawing Middle East crude exports away from the Altantic basin, which it said could drive U.S. crude futures to hit $150 barrel within the next month. 

January-May crude imports rose 12.7 percent to 75.97 million tonnes, the General Administration of Customs said (www.customs.gov.cn).

China’s net imports of oil products also surged 55 percent from a year ago to 4.66 million tonnes, Reuters calculations based on the customs data showed, as state oil firms responded to a combination of political pressure to maintain supplies and temporary tax benefits on imported gasoline and diesel.

“They (Chinese oil companies) don’t want to see any shortage get out of control. The tax incentives definately helped,” said Yan Kefeng of Cambridge Energy Research Associates. “And historic data shows that Chinese crude imports rise as crude prices rise — the instinct to stockpile.”

To help refiners Sinopec Corp and PetroChina cope with soaring crude costs, Beijing is refunding 75 percent of its 17 percent value-added tax on imports. Coupled with strong crude imports, China should see its apparent oil demand for May show much firmer growth than the modest 3.7 percent rise recorded for April, analysts said.

While record petrol prices are finally forcing U.S. motorists to drive less, demand from Chinese drivers — paying roughly a quarter less than their American peers — has yet to ebb noticeably, although shortages threaten to curtail use.

The International Energy Agency, which expects China to make up half the world’s oil demand growth this year, said Beijing may be more interested in building stocks of crude and oil products ahead of the Olympics than meeting pent-up demand.

“From this perspective, shortages would vanish once the Olympics begin and the world’s attention is focused on China, which would be eager to prove it is a modern nation where markets are well supplied,” the agency said on Tuesday.

DIESEL PINCH

While Asian governments from Indonesia to India have in recent weeks raised fuel prices to ease the mounting burden on national budgets, China, which consumes three times as much as India, has resisted the pressure of soaring crude prices.

Beijing has kept pump prices unchanged since November while world crude prices have soared by more than 40 percent.

As a result it has experienced sporadic fuel shortages over the past three years as refiners seek to limit sales of gasoline and diesel on the retail market, where they face losses on prices that are capped at far below global crude or product rates.

A diesel shortage that began spreading in May has worsened as farming activities get into full swings while supplies dwindle as independent refineries cut operations in face of heavy losses.

China’s energy chief Zhang Guobao was quoted by state media this week as saying that the country’s sensitive agriculture sector and its booming industry could be damaged by bringing fuel prices into line with international markets too quickly.

His comments once again signalled that Beijing is unlikely to raise rates until inflation eases from a current near 12-year high, and possibly until after the Beijing Olympics.

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