China Prioritizes Crude Imports

(Asia) Oil Displaces Dry Bulk Volumes

Chinese imports of crude oil have "recovered quickly," with the country prioritizing quayside space to take advantage of the recent oil price collapse, according to research consultancy IHS Markit

“The unloading of oil appears to be prioritized over dry bulk imports, as oil can be discharged quicker and with less people. The average unloading parcel size is also higher indicating that limited personnel at ports means a prioritization of larger vessels,” said Rahul Kapoor, head of commodity analytics and research, maritime and trade at IHS Markit.

The firm reports that Chinese imports of crude oil regained ground after falling to 4 million barrels per day in the week ending March 7, as crude oil imports were prioritized, creating delays at many ports.

Industrial Benefits
While coronavirus has hit the Chinese economy hard, the fall in oil prices will be welcome news for many parts of the country’s industrial sector, as they seek to restart once the outbreak has passed its peak.

“China benefits a lot from the price war as it is the world's biggest crude importer,” said Bai Jun, a committee member at the China Petroleum Society.

China has one of the world's largest strategic oil reserves, but opportunities afforded by the record low prices are leading government and port authorities to soak up more supplies in storage.

Oil Price Gouged

As of March 12, oil prices had fallen by a near record amount, down to around US$30 per barrel, representing the biggest weekly decline since 1991, following the Iraqi invasion of Kuwait, which sparked the first Gulf War.

The rapid fall in oil prices and rewiring of global trade patterns has impacted breakbulk operators across the globe, with many forwarders facing severe delays as ports prioritize core commodities.

“Lower oil prices should raise output by 0.3 percent above what it would have been with higher oil prices. This will provide some relief, but is a small offset to the many other drags facing the economy” said Julian Evans-Pritchard, senior China economist at Capital Economics.