China crude oil imports to set a record in 2023

China is expected to import a record amount of crude oil in 2023 due to increased demand for fuel as people travel more following the dismantling of COVID-19 controls and as a result of new refineries coming onstream, analysts said.

The prospect of strong demand from the world’s biggest importer will be another bullish factor for an oil market already supported by the OPEC+ producer group’s output cuts and western sanctions on Russian exports. China’s crude imports may rise between 500,000 and 1 MMbpd this year to as high as 11.8 MMbpd, reversing previous two years’ decline to exceed 2020’s record of 10.8 MMbpd, according to analysts from four industry consultancies – Wood Mackenzie, FGE, Energy Aspects and S&P Global Commodity Insight.

Their estimates are in line with the latest forecast by the International Energy Agency. Since the removal of COVID controls in December, China’s demand for gasoline and jet fuel has risen.

Sun Jianan, an analyst at Energy Aspects, reckoned gasoline and jet fuel would account for around 50% and 30% of total growth in demand for liquid fuels, respectively. Jet fuel consumption, according to Sun, would reach 90% of pre-COVID levels by end-2023.

Demand for diesel – a key industrial and transportation fuel – and petrochemical feedstock naphtha, may grow more slowly as it will take longer for the recovery in China’s manufacturing and property sectors to materialize, said FGE analyst Mia Geng and Energy Aspects’ Sun.

“Economic stimulus, along with infrastructure expansion in 2023 will set the stage for robust diesel consumption recovery,” Wang Zhuwei, an analyst at S&P Global Commodity Insight, said. With domestic consumption rising and lucrative export markets to supply, the four consultancies saw Chinese refineries raising crude throughput by between 850,000 to 1.2 MMbpd over 2022 levels, for an increase of between 6% to 9%.

Last year, China’s refineries posted their first annual decline in throughput since 2001. Chinese consultancy Longzhong said state-run refineries were lifting throughput during the first week of February by 5.5% from January to an average of 74.5% of capacity.

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Source: Reuters