China's crude imports in January rose 27.5 percent from a year earlier to the third-highest volume ever, suggesting robust demand to fill storage and to make up the shortfall as domestic production continues to fall.
China imported 34.03 million tonnes of crude oil in January, or 8.01 million barrels per day (bpd), the General Administration of Customs reported on Friday. The imports were down from December's record 8.57 million bpd.
"We believe this is driven by storage with excess crudes going into storage. Rising crude prices as a result of production cuts could have driven this extra buying," said Sushant Gupta, Research Director of refining and chemicals with Wood Mackenzie. "Declining domestic production also increases the need to import more."
China's crude shipments and fuel exports hit a record in December 2016. However, Reuters's calculations showed China's overall oil demand growth has been easing during the last three years.
China's crude imports are expected to soften in the first half of 2017, BMI research said. Heavy refinery maintenance and a lower crude processing rate at independent refineries will contribute to the falling demand, it said.
Still, the independent refineries, or teapots, will continue to be a key driver of the country's crude imports, estimates from Energy Aspects showed.
"We expect Chinese crude buying to increase by an additional 0.6-0.8 million barrels per day in 2017. Teapots will account for 0.2-0.4 million barrels per day of that," Michal Meidan, Asia Analyst with Energy Aspects said.
China's refined fuel products exports in January fell sharply to 3.04 million tonnes from a record 5.35 million in December, the customs data showed. But the country was still a net exporter for the month.
Natural gas imports to China rose to 5.83 million tonnes, up 12 percent from a year ago, the data showed.
