Chinese Fuel Oil Imports Jumped by 21% in the First Two Months of the Year

China’s imports of fuel oil surged by 21% in January and February compared to the same months in 2023, according to data from the Chinese General Administration of Customs released on Wednesday and reported by Reuters.

Fuel oil imports have been rising in the world’s top crude oil importer in recent months as the independent refiners, the so-called teapots based in the coastal province of Shandong, have ramped up the use of fuel oil as a cheaper feedstock.   

At the end of last year, the teapots had lower quotas to import crude oil. So they were seeking, through the provincial government of Shandong, to be allowed extra fuel oil supplies, which are cheap and can be processed into diesel and gasoline.

At the end of last year, China allocated to refiners an additional quota to import fuel oil for 2023.  

The trend of higher fuel oil imports apparently continued in early 2024, as Chinese imports rose by 21% year-over-year to 3.59 million metric tons in January and February, per the official customs data.

January fuel import levels were higher than in December 2023, but February imports slipped from January 2024, due to the Lunar New Year holidays and higher fuel oil inventories, Reuters notes.

At the same time, Chinese marine fuel exports increased by 2.1% in January-February compared to the same period of 2023, following a 3.2% yearly rise in full-year 2023 marine fuel exports, according to Chinese data.

Bunker fuel use has jumped in recent months, due to the re-routing of many vessels away from the Red Sea and the Suez Canal due to the Houthi attacks on commercial ships in the area.

Last week, the International Energy Agency (IEA) raised its 2024 outlook on global oil demand growth, by 110,000 barrels per day (bpd) from the February report.

The reasons for the IEA’s upward revision to demand are an improved outlook for U.S. oil demand, and higher demand for bunker fuel use, due to the trade flow disruptions in the Red Sea, which have made many vessel operators to opt for the longer route between Europe and Asia via the Cape of Good Hope in Africa.

By Charles Kennedy for Oilprice.com

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