The volume of floating crude cargoes in Chinese waters has hit a record high, dampening Chinese refiners’ buying interest in August-onward deliveries, refiners and analysts said July 2.
There were 42.98 million barrels of crude on tankers idled in Chinese waters for 15 or more days in the week beginning June 29, trade flow and inventory tracker Kpler said July 2.
The volume was 41.6% higher than the previous record of 30.36 million barrels set just the week before.
The volume of cargoes in Chinese waters for over 15 days has been consistently setting fresh highs since May 18-24’s 11.58 million barrels.
By contrast, before 2020, the highest volume left afloat for more than 15 days in Chinese waters was 9.78 million barrels in the week beginning April 2, 2019, according to Kpler data.
The volume afloat for more than seven days in the week beginning June 29 was even higher at 84.68 million barrels, indicating a flood of new arrivals.
The high level of floating storage is down to port congestion caused by a massive influx of crude Chinese companies bought when prices were low.
“The high floating volume and long queue are likely to continue until August,” a source with Qingdao Port in Shandong, China’s biggest crude port by turnover, said.
BUYING SPREE PAUSED
“We have few cargoes in the queue waiting to discharge, which should be sufficient to meet our throughput needs for a while,” a source at a Shandong-based independent refiner said, adding his company would be taking a break from purchasing.
China, the world’s biggest crude importer, is “more likely to keep destocking the cheap crudes in the coming months instead of buying more when the crude price is rising,” a Hong Kong-based analyst said.
“China’s crude imports will slow down in August/September and return to normal levels as the country is pausing its crude buying spree,” a Beijing-based analyst said, adding that it was very likely another record high would be set for crude imports in June and July after May.
Not only floating, but also the onshore stocks hit a record high 855.22 million barrels in the week beginning June 29, Kpler data showed.
As a result, more and more European and West African crudes, which had been China’s favorites, have been fixed to head to Europe.
Crude imports by China jumped 19.2% on the year to an all-time high of 11.34 million b/d in May, Chinese customs data showed.