China’s fuel oil imports experienced a significant decline in May, retreating from the multi-year highs reached in the previous month, according to data from the General Administration of Customs.
In May, China’s fuel oil imports totaled 2.15 million metric tons (approximately 441,180 barrels per day), marking a 27% decrease from April’s figure and a 19% drop compared to the same period a year earlier.
The decline in import volumes was attributed to a retreat in demand, as fuel oil prices rose in line with strengthening cracks (the price difference between high-sulfur fuel oil and crude oil) in the Asian market. According to data from LSEG, the cracks for 380-cst high-sulfur fuel oil (HSFO) rallied to their strongest level in nine months towards the end of May.
In contrast, China’s fuel oil import volumes in April had surged to their highest since at least 2020. This was driven by traders bringing in more shipments from Venezuela and Iran, while some refiners increased their purchases of the commodity as feedstock, before prices rose further.
The import volumes included purchases under ordinary trade, which are subject to import duty and consumption tax, as well as imports into bonded storage.
Alongside the decline in imports, China’s fuel oil export volumes for bunkering (ship fuel) also saw a decrease in May. The exports, mostly measured by sales from bonded storage for vessels plying international routes, totaled 1.66 million tons, up 1% from April but down 10% from the corresponding month last year.
The fluctuations in China’s fuel oil trade highlight the volatility in the market, as import and export patterns continue to be influenced by factors such as price movements and market dynamics.