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China’s oil imports may

stay the course in 2021

Speculation that China’s oil buying spree is on
the verge of losing steam may be premature

COMMENTARY CHINA’S oil imports have attracted a great deal thought to have accounted for nearly half of the
of attention this year, not least because their country’s crude inventory build-up this year.
surge to record-breaking highs has been a key While an estimate 110-140mn barrels of
WHAT: supporter of prices amid the global economic additional tank space is thought to have been
China’s oil imports may downturn. added this year, forecasts for next year suggest
remain strong in 2021, Much of the commentary over the last few another 100mn barrels is in the pipeline.
despite concerns over months has focused on whether the country’s Independent refiner Shandong Hongrun
sustainability. buying spree can continue into next year. added 22 tanks each with 100,000 cubic metres
Some argue that that Chinese buyers’ oppor- (629,000 barrels) of storage this year and plans
WHY: tunistic purchases of cheap oil cannot continue to add another 28 similarly sized tanks next
The country is expanding indefinitely, with domestic demand still to year, a company official told Reuters. Fellow
storage and refining recover to pre-pandemic levels and domestic independent refiner Hengli Petrochemical has
capacity. storage capacity reaching capacity. However, added 3.6mn cubic metres (21.39mn barrels)
there are factors at play to support claims that of new crude oil storage to its 400,000 bpd
WHAT NEXT: Chinese oil imports will remain robust in 2021. downstream complex in Liaoning Province.
Smaller, older refineries Not only are the country’s storage operators Yantai Port, meanwhile, is expected to add
in the Asia-Pacific could looking to boost capacity next year, but a recov- 7.6mn barrels of storage by August 2021, while
well close next year. ery in economic activity will likely boost domes- Qingdao Port will add 3.8mn barrels of storage to
tic demand even as refiners count on export compliment the 10mn barrels it added in 2020.
markets to mop up any excess supply. “Non-state storage build has become a
bright spot this year, and the trend will con-
Storage expansion tinue as the government lowers thresholds
Reuters reported in mid-November that Chi- for private firms to participate,” private stor-
na’s commercial oil storage operators were age operator Jinggu Energy’s senior manager,
planning to expand capacity in 2021. Chen Lin, told Reuters.
Private tank farms, refiners and traders may Energy Aspects’ China analyst, Liu Yuntao,
have stored an extra 310-600mn barrels of oil said: “Given how lucrative the storage business
in China this year, according to surveys of five is in 2020, everyone will try to boost their stor-
analysts. Moreover, the commercial sector is age capacity.”

Week 49 10•December•2020 www. NEWSBASE .com P11