How China’s crude oil imports are exaggerated

 

How China’s crude oil imports are exaggerated

Accumulated domestic crude oil supply/demand balance, that deducts processing volume from the total supply of net imports and productions, reached 23.4 million metric tons in Jan-May 2018, according to the government stats. That throughout 2017 was 44.6 million mt. The monthly balance rarely shows negative figures and total accumulation since Jan 2006 attains 270 million mt.

However, China’s National Bureau of Statistics said that strategic petroleum reserves in the nation are only 37.73 mt as of mid-2017. This volume was higher than a year ago by 4.48 million mt and the International Energy Agency estimated that China’s SPR stood at 39.2 million mt as of end-2017.

Meanwhile, commercial crude oil inventories in China as of end-2017 were estimated at 27 million mt by Xinhua News. The latest figure as of end April 2018 was 27.4 million mt. The commercial crude oil inventories have been swung between 25 and 35 million mt during the 2010’s. It is basically under the downward tendency after peaked in Sep 2014. Petroleum products inventories are also indicating a seasonal cycle and no significant upward trend is seen.

Therefore, the statistically calculated crude oil surplus is clearly larger than the actual increase in the stockpile. It is a mystery where the surplus is gone. Many people believe that Chinese stats are not reliable, but even that, the discrepancy looks too large.

Crude oil processing volumes released by the NBS are about 50 million mt recently. These figures are the sum of collected data from enterprises that have more than 5 million RMB of annual sales. Since oil refiners are unlikely to have less than US$0.8 million of annual sales, the processing volume could cover all eligible firms. Additionally, it is not realistic to estimate that those firms report much smaller production than they actually do.

Current estimated total of the strategic petroleum reserves and commercial oil inventories in China are close to 90 million mt. It equivalents to about 55 days of the nation’s recent consumption volume. Although this level is still far from 90 days that is recommended by the OECD, a significant progress is seen as Chinese petroleum demand has doubled from a decade ago when its stockpile only covered less than a month of consumption.

On the other hand, China may have equipped nearly its 170 days of consumption equivalent petroleum stockpiles based on the above surplus calculation. However, we can’t find their storage facilities for such large volume. Thus, it is reasonable to guess that import figures are overblown. Based on the discrepancy among estimated stockpiles, China’s actual crude oil imports are likely to be below the customs reported volume by about 10%. Chinese influence in the global crude oil market should be discounted.

【Sozen Fujiwara

Research partner、Institute of Economics for Humans

Private investor

Bachelor of Arts, Hiroshima University

Master of Economics, Nihon University

Worked as a reporter for US-based financial media after engaged in futures markets in China and Southeast Asia as a trader. Before that started work experience as a local newspaper reporter.

Immigrated to New Zealand for children’s educational opportunity. Participated in the management of a nutritional product manufacturer that is owned by wife’s family.

Having more than 30 years experience in commodity markets and operating a crude oil market specific blog since 2010: https://ameblo.jp/sozen22/

研究調査等紹介

最澄と空海、そしてフィリピン

  宝瑞院のスタッフが「最澄と空海ー悟りを開いた男達の⽣涯」という YouTube動画を紹介してくれました。「歴史を⾯⽩く学ぶ」コンセプト、膨⼤な分量でしたが楽しい語り⼝ で、⼀晩で⾒てしまいました。 「最澄と空海」を、 .....

まぐまぐとサイバーエージェント

  ネットの歴史は「ビジネスの発展と、理想の後退の歴史」でもあります。 私が以前経営したIPOコンサル会社は「まぐまぐ」というメルマガ配信システムの運営会社から出資を受けていました。ネットの理想を投資銀⾏的な観 .....

瞑想でお⾦持ちになれますか?

  「瞑想でお⾦持ちになれますか?」というご質問を頂きました。 私の会社が破綻したのは密教修⾏の最中、広い意味で瞑想中でした。私のお師僧も阿闍梨を取得した後、朝⼣の勤⾏(瞑想)は⽋かしませんでしたが、かつて経営に失敗され .....

仏教と量子論

  仏教と量子論 「法印」とは仏教の特徴を表す「しるし」です。法印が無ければ、たとえお釈迦様が主役でも仏教ではないし、法印が揃えば凡夫の戯⾔も、仏教だと捉えることが可能です。 お釈迦様が直接説いた可能性が⾼いのは、古いス .....