China data: Russian crude tops Saudi Arabian supply again on strong
spot buying
Singapore (Platts)--26 Oct 2015 459 am EDT/859 GMT
China's crude imports from Russia surpassed those from Saudi Arabia
for the second time to hit a new monthly record high of 4.04 million mt
in September amid strong spot buying.
September arrivals from Russia jumped 42.3% year on year and 31% from
August, making the country the top crude supplier to China for the
month, according to detailed data from China's General Administration of
Customs released Friday.
Russia was China's top crude supplier for the first time in May, sending
3.92 million mt.
But September imports from Saudi Arabia fell 16.6% year on year and
edged up 1.1% from August to 3.95 million mt.
China has been increasing its crude imports to take advantage of low
oil prices, and the market share of Russian crude is expanding while
supply from Saudi Arabia has fallen.
Over January-September, China imported 248.62 million mt of crude, up
8.8% year on year.
Imports from Russia surged 30% over the same period and accounted for
12.2% of China's total January-September imports, up from 10.2% a year
earlier.
Imports from Saudi Arabia grew at a much slower 5.1% year on year in
January-September, and its market share fell to 15.5%, from 16%.
That means the additional barrels China is importing to meet demand from
teapot refineries with new crude import quotas is more likely to come
from Russia than traditional top supplier Saudi Arabia.
China's demand has also been underpinned by its ability build strategic
and commercial stockpiles while a steep contango in the Dubai market
structure made oil storage profitable.
NEW CRUDE DEMAND
Russian supply has met some of that new demand because it is often sold
on the spot market, in contrast to Saudi Arabian crude mainly sold on
long-term contracts with fixed destinations.
The additional supply is mostly Russian medium sweet ESPO blend, Russian
light sweet Sokol crude and Omani crudes, with the rest coming from
Latin America and Southeast Asia.
The trend is expected to continue for at least the rest of the year, as
the teapot refiners have shown strong spot buying for December-loading
ESPO cargoes.
The demand pushed ESPO's premium to $4.70/b over front-month Dubai swap
Friday, well above the extra $1.50/b in freight costs to ship Middle
East barrels to China.
Teapot refineries have received quotas to import 33.24 million mt of
crude this year, equivalent to 667,000 b/d.
TEAPOTS ALSO TURN TO OMAN CRUDE
China's crude imports from Oman have increased for the same reasons,
making it the third top crude source.
The September imports rose 17.6% year on year to 3.17 million mt.
According to Oman's oil ministry, China took more than 94% of its crude
output and total exports in September.
The trend is expected to continue as a record total of 78
October-loading convergence cargoes were declared in the Platts Dubai
assessment process in August, of which 51 were Oman crude cargoes.
ChinaOil bought most of those cargoes, indicating the bulk of the Omani
imports will go into storage, as the company has the responsibility to
buy crudes for China's strategic and commercial storage.
--Analysis by Oceana Zhou,
oceana.zhou@platts.com
--Edited by Meghan Gordon,
meghan.gordon@platts.com
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