China oil imports slide, fueling demand fears

China imported 9.97 million barrels of oil daily last month on average, which was 12% lower than the June figure and 3% lower than the daily import average for July 2023.

Illustrative image

The data will likely stoke fears about the strength of demand in the world’s largest oil importer and pressure prices.

The July decline follows an 11% annual decline in crude oil imports reported for June, although that decline was from a record high booked for June 2023. In the first half of 2024, crude arrivals also dropped, by 2.3% compared to the first half of last year, according to data from China’s General Administration of Customs released in early July.

Reuters reported in a piece on the import data that the development was a result of slumping refining margins in China amid weaker fuel demand, which led to production curbs and, consequently, import weakening. Higher oil prices contributed to the gravity of the refiners’ situation.

According to data from Chinese consultancy Oilchem, as cited by Reuters, independent refiners in the country operated at a mere 56.11% of capacity last month—the lowest capacity utilization rate since 2021. Some refineries were even turning out losses and were shut down indefinitely to stop the bleeding.

The property sector crisis and the rise of LNG use in trucking have weighed on China’s diesel demand this year, dampening the prospects of oil demand growth in the world’s top crude importer, which has been a key driver of global demand growth for years.

Gasoline demand may be plateauing, but diesel demand is outright falling, according to analyst projections. China’s diesel demand in the second half of 2024 is set to decline by between 2% and 7% on an annual basis, according to four out of five analysts in a recent Reuters survey