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China’s crude oil imports dropped in May from the record-high in April, as some major refineries started planned maintenance and as China ordered some independent refiners to reduce operating rates this month ahead of a regional summit in the port city Qingdao in the eastern Shandong province.
China’s crude oil imports averaged 9.2 million bpd in May, according to Reuters calculations on data released by China’s General Administration of Customs on Friday.
The import volume last month was off the all-time high of 9.6 million bpd set in April, when independent refiners—the so-called teapots—shipped backlogged cargoes and bought more oil on the back of steady refining margins.
The Chinese imports in May 2018 grew by nearly 5 percent from the same month last year, when China had imported 8.76 million bpd.
But exports were off the record highs in April, because the refineries Sinopec Shanghai Petrochemical, Sinopec Yangzi, and PetroChina’s Dalian and Jilin were slated to undergo regular major maintenance between April and May.
Another reason for the lower Chinese imports in May was Beijing’s orders to several independent refiners in the Shandong province to process crude oil at reduced rates in June. Shandong’s port city Qingdao is hosting this month a summit of the Shanghai Cooperation Organisation (SCO).
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At least five independent refiners have been asked to cut processing rates, as China aims to show blue skies to the summit’s participants, sources at the refiners told Reuters last week. According to Reuters estimates, the run-rate cuts range between 30 percent and 50 percent of the refineries’ capacities, which would remove around 45,000 bpd of crude processing capacity from the market.
Commenting on China’s total crude oil imports for May, Seng-Yick Tee of consultancy SIA Energy told Reuters:
“Overall, independents continued to be the main driver for incremental growth due to more quotas, and state refiners PetroChina and CNOOC also contributed to a large extent to the imports due to commissioning of new plants.”
By Tsvetana Paraskova for Oilprice.com