2015-03-18

Chinese Crude Imports Outpacing SPR Construction

China is running out of crude inventory space as the country took advantage of low prices. SPR construction will open up space later in the year, but in the near term, crude imports might repeat the January drop in the months ahead.
Global oil glut set to grow as China slows crude imports
China's purchases to fill its strategic petroleum reserves (SPR) had been one of the main drivers of Asian demand since August of last year, with the No.2 oil consumer taking up cheap crude to fill its tanks despite slowing economic growth.

Yet China could pause its reserve purchases soon as tank sites reach their limits and new space only becomes available later this year.

Little is known about China's SPR levels. The government seldom issues data, but its plan is to reach around 600 million barrels, about 90 days' worth of imports. Most estimates put the SPR stocks currently to be 30-40 days' worth.

"I don't think there is much (SPR) space left to fill," a Chinese storage executive said under the condition of anonymity.

In the Zhoushan area of Zhejiang province - site of two SPR bases and major commercial storage facilities - tanks are brimming, the executive said. "They are so full that one VLCC tanker owned by a state refiner has had to wait for almost 15 days to discharge," he said.
In January oil imports collapsed from trend growth, falling 0.6% from January 2014: Chinese Import Volumes Fall, Crude Import Surge is Over. Last month, imports were up 4.5% over February 2014: Chinese Imports Improve Slightly, Oil Imports Positive Again.

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