Key Takeaways
- China's crude oil imports in September fell 21.5% year-on-year.
- Refinery runs increased, but seaborne imports dropped, leading to significant crude stock draws.
- Soybean imports fell 7.7% in September, with a high base from the previous year contributing to the decline.
China's September crude oil imports declined by 21.5% from the same month last year, according to customs data. The country imported 37.1 million metric tons of crude oil, or 9.03 million barrels per day, a slight increase of 1.1% from the previous month. Despite this, the daily import rate fell from 9.9 million barrels per day a year earlier to 7.6 million barrels per day in September, as reported by Vortexa.
The significant drawdown in China's onshore crude inventories was attributed to higher refinery runs and delayed crude arrivals. Analysts at Vortexa noted that Middle East shipping disruptions, particularly bottlenecks in ship-to-ship transfers around the Strait of Hormuz, delayed crude cargoes, forcing refiners to draw on stocks. Kpler recorded a 47.5 million barrels draw in September, marking the largest monthly inventory draw since their data series began in 2017.
China's crude distillation capacity utilisation rate rose to 66.36% in September, up 1.98 percentage points from August, according to Oilchem. The surge in fuel exports supported demand, while diesel and gasoline inventories fell to their lowest levels in over a decade. Analysts expect China's seaborne crude imports to average 8 million to 8.5 million barrels per day in the fourth quarter, with some Iranian crude being replaced by supply from other Middle Eastern countries, mainly Iraq, and an increase in shipments from Saudi Arabia.
In the first three quarters, China imported 357.97 million tons of crude oil, down 15.3% from the same period last year. Natural gas imports also declined, with August imports standing at 10.86 million tons, down 1.7% from the previous year. For the first nine months, natural gas imports were 89.23 million tons, down 3.9% year on year.
China's exports of refined oil products, including gasoline, diesel, jet fuel, and fuel oil, totalled 7.16 million tons in September. For the first nine months, China exported 41.4 million tons of refined oil products, down 3.7% year on year.
China's soybean imports in September fell 7.7% from the same month last year, according to customs data. The country imported 11.88 million metric tons of soybeans, down from 12.87 million tons a year earlier and 12.14 million tons in August. From January to September, soybean arrivals in the world's largest buyer totalled 86.08 million tons.
The decline in soybean imports was mainly due to a high base from the previous year, when Chinese buyers increased purchases of South American soybeans amid trade tensions between Beijing and Washington. Analyst Rosa Wang from Shanghai JC Intelligence stated that Brazil's sales of old-crop soybeans have progressed rapidly, with fewer outbound shipments available in September. The new season for US soybeans has just started harvesting, and the volume available for shipment has not yet increased.
China has now passed the halfway mark toward fulfilling its commitment to buy 25 million tons of US soybeans, a deal reached last October. Buying is likely to decline in the months ahead due to weak animal feed demand and negative crush margins, leaving little room for US cargoes as they were excluded from proposed tariff relief after last month's Washington summit. Analysts expect China's soybean arrivals to average around 9.5 million tons per month in the fourth quarter.
Middle East shipping disruptions, mainly bottlenecks in ship-to-ship transfers around Hormuz, are expected to significantly delay crude cargoes due in late August and September, forcing refiners to draw on stocks.
Emma Li, Analyst at Vortexa
China's soybean arrivals are expected to average around 9.5 million tons per month in the fourth quarter.
Cai Hongli, Deputy general manager of market research at COFCO Oils
