Page 8 - AsianOil Week 32

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China’s oil imports jump 14% in July
PERFORMANCE
CHINA’S crude oil imports rose by 14% year on year in July to 41.04mn tonnes (9.7mn bar- rels per day), according to General Admin- istration of Customs (GAC) data. Volumes were also up from the 9.67mn bpd imported in June.
China bought 285.64mn tonnes (9.88mn bpd) of oil in the rst seven months of this year, up 9.5% y/y. Improving gross re ning margins (GRMs) are believed to have been behind the uptick in shipments.
Reuters quoted Sublime China Information’s head of crude oil research, Wang Zhao, as saying: “Utilisation rates at re neries are picking up as they have started to see pro t margins coming out of the red in recent weeks.”
Independent re ners were reportedly losing CNY300-350 yuan ($42.44-49.52) per tonne of crude oil they processed in June.
Strong diesel demand from coal miners have buoyed pro ts, with analysts noting that pro t from diesel products was as much as CNY300 per tonne in July, o setting losses on gasoline. Renewed demand from re ners that nished their maintenance cycles has also helped to boost demand for crude oil. In addi- tion, new capacity from Hengli Petrochemical
and Zhejiang Petrochemical has helped to drive up crude demand. The two privately owned companies operate 400,000 bpd inte- grated complexes in Dalian and Zhoushan respectively.
The rise in refinery runs does not nec- essarily mean improved domestic demand, however. Oil product demand growth has been weakening in the face of a slowdown in the wider economy. China’s automotive sales shrank more than 12% y/y in the rst six months to 12.3mn vehicles. Of that gure, passenger vehicle sales slipped almost 10% to around 10mn units.
Oil product exports jumped nearly 9% y/y in the January to July period to 38.01mn tonnes, according to GAC data, whose expan- sion was helped along by a 20% surge in July’s shipments to 5.49mn tonnes. e central gov- ernment issued its third batch of oil product export quotas for the year in July, bringing the total to 48.15mn tonnes. is was up from the 43mn tonnes that were issued in the same period of 2018.
e country’s imports of natural gas climbed from 7.38mn tonnes in July 2018 to 7.89mn tonnes last month, according to the GAC data.™
China to miss 2020 target for E10 use
POLICY
CHINA is set to miss its target of implementing E10 gasoline consumption nationwide by 2020, according to a new report published by the US Department of Agriculture (USDA).
The report, filed with the USDA Foreign Agricultural Service’s Global Agricultural Infor- mation Network, predicts that China is only likely to achieve an ethanol blend rate of 2.5% this year, with that rising to 3-3.5% in 2020.
The central government announced its 2020 roll-out plans in September 2017. The USDA-published report, however, notes that current ethanol policy is little more than a “patchwork of provincial and munic- ipal-level regulations”.
It notes that central and provincial author- ities have failed to renew subsidies for ethanol production, adding: “Without clear incentives and enforceable compliance measure, China’s ethanol industry will struggle to raise the level of biofuels used in transportation fuels to meet China’s E10 goal by 2020.”
Implementing a national ethanol fuel stand- ard across China will require signi cant invest- ment in expanding capacity for ethanol storage, transportation and blending into re ned gaso- line, the report adds. It claims that the central
government will need to reform energy and trade policies in order to boost ethanol use.
“Without an enforceable national fuel stand- ard for ethanol blend use, energy investors lack certainty to expand investments into ethanol storage, distribution and blending infrastruc- ture,” the report says.
It estimates that Chinese ethanol produc- tion capacity will expand by 258mn litres this year to 5.26bn litres as the number of ethanol re neries rise from 12 in 2018 to 14 this year. Production is forecast to grow from 2.91bn litres in 2018 to 4.31bn litres this year, as capacity usage expands from 58% in 2018 to 82% in 2019.
While domestic production is one part of the puzzle, the country still needs to rely on imports to bridge the supply gap. e report noted that a fully implemented national E10 fuel ethanol and gasoline blending programme would see China consume 19bn litres of fuel ethanol in 2020.
Complicating matters, however, is Beijing and Washington’s ongoing trade war. e report noted that China’s move to impose an up to 70% tari on US ethanol shipments in 2018 had undercut the competitiveness of supplies from the world’s biggest ethanol producer.™
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w w w . N E W S B A S E . c o m Week 32 14•August•2019