China's fuel oil imports rebounded in October from a one-year low logged in the previous month, customs data showed on Monday, thanks to strong demand from Chinese independent refiners amidst tight crude oil import quotas. Total fuel oil imports reached 1.81 million metric tons in October, up from 1.04 million tons in September, according to data from the General Administration of Customs. The import tally included purchases under ordinary trade, which is subject to import duty and consumption tax, as well as imports into bonded storage. China's small-scaled independent refineries, known as teapots, have increased imports of fuel oil, especially straight-run fuel oil, due to attractive prices and robust demand for refining feedstocks.
The government of Shandong province, China's teapot hub, has asked Beijing for an extra 3 million metric tons of fuel oil import quotas for the rest of 2023 to enable plants to raise output amid a shortage of crude oil quotas. Over the first 10 months of 2023, China brought in a total of 19.19 million tons of fuel oil, more than double of the level in the same period last year. But as refineries lower operational rates due to thinning margins, demand for refining feedstocks, including fuel oil, could be weakening in the remaining weeks of 2023.
Meanwhile, exports of low sulphur marine fuels (LSFO), measured mostly by sales from bonded storage for vessels plying international routes, continued to fall in October, at 1.39 million tons, as some refineries temporarily shut down for maintenance and as refiners are close to running out of export quotas. Analysts from China-based energy consultancy JLC expect the country to see a plunge of LSFO output in the fourth quarter, if Beijing does not issue new export allowances. China has so far issued three batches of LSFO export quotas totalling 14 million tons. The table below shows China's fuel oil imports and exports in metric tons.
The exports section largely captures China's low sulphur oil bunkering sales along its coast. Exports (2023) Bonded storage trade m/m % change y/y % change January 1,254,080 11% -46% February 1,535,577 22% 17% March 1,953,559 27% 38% April 1,363,152 -30% 12% May 1,852,058 36% 32% June 1,930,444 4% 37% July 1,535,826 -20% -3% August 1,550,314 1% -20% September 1,469,265 -5% -23% October* 1,389,866 -5% 19% Imports (2023) Ordinary trade Bonded storage trade Total m/m % change y/y % change January 569,376 640,022 1,209,399 -31% 47% February 424,254 1,331,623 1,755,877 45% 103% March 752,172 1,680,788 2,432,960 39% 149% April 614,324 2,051,381 2,665,703 10% 277% May 964,662 1,606,184 2,570,846 -4% 150% June 1,145,340 1,553,300 2,698,640 5% 226% July 752,554 764,616 1,517,170 -44% 105% August 534,321 862,406 1,396,727 -8% 109% September 379,343 665,319 1,044,662 -25% 3% October 648,738 1,162,750 1,811,488 73% 34% (Figures are based on latest available data at the time of publishing, and may be subject to revision by China customs at a later date) (Reporting by Muyu Xu and Colleen Howe; Editing by Raju Gopalakrishnan and Mrigank Dhaniwala)