Shipments of West African oil to
China are set to surge to a record in January, boosting overall
fixtures heading east to their highest in at least 14 years, a
Reuters survey of shipping fixtures and traders showed on
China’s loadings are expected to jump by more than 20
percent from December to more than 1.5 million barrels per day
(bpd) in January, the survey showed.
The figure is the highest barrel-per-day total to sail for
China since September, and is some 37 percent above the same
month last year.
Traders said China’s appetite was whetted in part by the
first batch of government import quotas for 2018, which were
issued in late December, but announced in November. This
prompted some companies to book cargoes early in order to arrive
as quickly as possible.
Energy Aspects said a large amount of destocking in the
fourth quarter, which amounted to a total drawdown of some 40-60
million barrels in China, also prompted strong demand from the
world’s second-largest oil consumer.
“There’s certainly a large pull from China,” said Michal
Meidan, Asia analyst with Energy Aspects. “Demand has been good
and the runs have been high. They need the crude.”
The bookings helped to propel overall fixtures heading east
to 2.39 million bpd, a record since Reuters tracking began in
2004. The previous record was in April 2015 at 2.343 million
bpd, when India booked more than 1 million bpd.
Still, there is fierce competition for Chinese and other
Asian buyers, with U.S. crudes increasingly edging into the
market, often at the expense of West African grades.
Supply of Russian ESPO Blend is also increasing this year.
Already, PetroChina has nearly doubled the amount of Russian
crude processed at its refinery in Dalian as a new supply
agreement has come into effect.
Additionally, Meidan said China’s meteoric demand growth in
2017, which Energy Aspects pegged at roughly 800,000-900,000 bpd
year-on-year, will also slow substantially in 2018, limiting new
opportunities to sell the nation oil.
COUNTRY January BPD December BPD ‘000s
cargoes ‘000s cargoes
CHINA 52 1,594 43 1,318
INDIA 16 490 17 521
INDONESIA 2 61 4 123
TAIWAN 2 61 2 61
JAPAN 0 0 0 0
S. KOREA 0 0 0 0
OTHERS 6 184 7 215
TOTAL 78 2,390 73 2,237