China imported more crude in December than ever before, taking advantage of plunging prices to fill its storage capacity. The FT reports:
China imported 7.15m bpd in December, bringing its full-year crude imports to a record 308m tonnes up nearly 10 per cent on the year. Some of that additional demand reflects economic growth and new refineries coming on line but most is probably going into tank farms, according to market watchers.
We noted last week that Beijing was estimated to have added twice the amount of crude in its strategic petroleum reserve in 2014 than it did in 2013. As the FT notes, this was not an import strategy motivated by domestic demand:
One sign that China’s rising crude imports are not all demand-driven is the noticeable increase in refined products exports, as China’s rise in oil refining capacity outstrips demand. Chinese oil products exports rose 4 per cent in 2014, to nearly 30m tonnes.“Not only is China’s oil product demand slowing as Chinese consumption becomes more efficient and less oil intensive, China’s appetite for crude imports will also plateau once it completes building its SPR as the pace of refinery buildouts is also slowing,” said Ms Sen.
China was already filling up its strategic petroleum reserve at a record pace back in June, when prices were more than twice as high as they are now. It’s not surprising, then, that Beijing is setting all kinds of records as it snatches up oil at bargain basement prices. So far, China’s increased appetite hasn’t been enough to stop the plunging price of the global commodity, but this is certainly something to keep an eye on in 2015.