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China's imports of US crude oil are expected to hit record-high
levels in July with cargoes shipped in May having surpassed 550,000
b/d. Cargoes loaded on ships in April have been the first since
November 2019. Chinese refiners have been rushing to secure
bargains when available US crude oil barrels increased, oil prices
were under severe pressure due to additional production from Saudi
Arabia and tanker freight rates started declining after the peak
observed in April. Loading activity has remained strong in first
half of June, with volumes above 400,000 b/d so far. This is a
massive year-on-year increase, as the USA shipped only 183,000 b/d
in May 2019 and 134,000 b/d in June 2019.
Meanwhile, flows from the USA to South Korea have marginally
declined in May as some refiners undergo maintenance while demand
remains weak as fuel consumption is hit by the COVID-19 pandemic.
South Korea has been heavily relying on barrels coming from the
USA, with the country ranked fourth after Saudi Arabia, Kuwait and
Russia so far in 2020. Imports dropped close to 200,000 b/d. This
is the lowest since late 2018, but the trend is not expected to
last as US shipments heading for South Korea have partially
recovered since April 2020.
A very different story to tell about South Korean imports of
Saudi Arabian barrels which quickly recovered in May while volumes
in first half of June have nearly reached 900,000 b/d.
Moving to India, crude oil flows from the USA are now expected
to strengthen again, as the country has been trying to reduce its
dependence on OPEC producers. India has been importing around 80%
of its oil requirements, with OPEC exporters, mainly those in the
Middle East Gulf, having the biggest market share. US shipments to
India increased quickly in May after sharply falling in April.
Local refiners absorbed as much as possible from the Middle East
when oil prices were under severe pressure due to additional
production and exports, while freight rates reached new record
highs. But the market has changed drastically last month, allowing
them to focus yet again on US barrels. WTI crude oil processed in
India is now understood to represent more than 10% of the country's
total processing.
Posted 17 June 2020 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade
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