(Repeats item with no changes in text. The opinions expressed here are those of the author, a columnist for Reuters.)
* GRAPHIC - China's crude oil imports vs Brent price: tmsnrt.rs/3iUnVz0
LAUNCESTON, Australia, Jan 28 (Reuters) - Asia’s crude oil imports are off to a roaring start in the New Year, as China once again ramps up purchases and the region’s other major buyers show signs of demand recovering despite the ongoing coronavirus pandemic.
A total of 26.14 million barrels per day (bpd) is forecast to be discharged in Asia in January, according to vessel-tracking and port data compiled by Refinitiv.
This would represent a 7.5% increase on December’s 24.32 million bpd, making January the fourth consecutive month of import gains.
The increase is once again being led by China, the world’s largest crude importer, expected to land about 12 million bpd in January according to Refinitiv. That would be up 33% from the official figure of 9.06 million bpd in December.
The surge in January imports is most likely because China issued import quotas for the New Year, which increased the volumes independent refiners were able to buy.
There is also likely a contribution from some cargoes that arrived in December, but couldn’t offload until the new quotas came into effect.
What this means is that China’s January figures are likely somewhat higher than they would normally have been, but even allowing for spillover cargoes from the previous month, they are still off to a strong start.
Higher refinery capacity and throughput should serve to keep China’s imports robust in 2021, but a questionmark remains over how much crude will be put into strategic and commercial storage.
China put an estimated 1.29 million bpd into inventories in 2020. Imports surged in the second half of the year as refiners took advantage of a plunge in prices to 17-year lows while the coronavirus pandemic crushed demand around the globe and major exporters Saudi Arabia and Russia engaged in a brief price war.
Another factor worth watching regarding China’s imports is the price of crude oil, which has risen strongly in recent weeks.
China tends to stock up on crude when prices are deemed to be cheap, and pull back on purchases for inventories when prices increase.
Global benchmark Brent has gone from $45 a barrel in mid-November, the time around when most January-arriving cargoes would have been arranged, to around $55.58 in early Asian trade on Thursday.
Demand in India, Asia’s second-biggest crude importer, is recovering strongly with Refinitiv estimating January arrivals at 4.68 million bpd.
While this is down slightly from December’s official figure of 4.83 million bpd - a two-year high - it still shows India’s demand is up from last year. In 2020 imports below 4 million bpd were recorded for several months after the government imposed lockdowns in March to combat the coronavirus outbreak.
Japan, Asia’s third-biggest crude importer, is also showing some signs of recovery, with January imports pegged at 2.96 million bpd, up from 2.57 million bpd in December and 2.3 million bpd in November. Higher demand for heating oil during a colder-than-expected winter may have helped boost Japan’s crude demand.
South Korea, which is challenging Japan’s third-ranked spot among Asia’s importers, is expected to land about 3 million bpd in January, up from 2.45 million bpd in December and 2.27 million bpd in November.
If the final outcome is in line with Refinitiv’s forecast, it would mean South Korea is back to import levels similar to those that prevailed prior to the pandemic striking.
Overall, the data does point to a recovery in Asian crude demand, suggesting the region’s demand is returning to what could be viewed as normal levels.
However, there are some factors still worth watching, chief among them the levels of refined product exports from Asia’s big four crude importers.
All four, but especially China and India, are major suppliers of refined products. If crude imports and refinery throughput are running at fairly high levels, it would be reasonable to expect that more fuel will be available for export.
The question is whether regional demand will be sufficient to absorb a marked increase in the supply of refined products, or whether export-focused refineries are getting ahead of the expected recovery in fuel consumption. (Editing by Kenneth Maxwell)
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