China and India keep Asia’s crude oil imports robust in March

Launceston, Australia — Asia’s imports of crude oil stayed at relatively robust levels in March, as strong inflows to the top-importing region’s heavyweights China and India offset weaker demand among some other buyers.

Total March crude imports were estimated by Refinitiv Oil Research at 116.73 million tonnes, equivalent to 27.60 million barrels per day (bpd).

This was up almost 4% from February’s 112.32 million tonnes, but down 6.1% on a daily basis from February’s 29.4 million bpd, and also below January’s 29.13 million bpd.

However, the first three months of 2023 were stronger than every month in 2022, except for November when Asia’s crude imports were 29.10 million bpd.

Despite the lower daily imports in March, it has been a strong start to the year for Asia’s oil imports, with the first quarter seeing arrivals of 28.67 million bpd, up 6.3% from the 26.96 million bpd in the fourth quarter of 2022.

The numbers support some of the bullish narrative in oil markets, which has been centred on a strong rebound in demand from China as the world’s biggest crude importer reopens its economy after ending its strict zero-COVID policy at the end of last year.

China’s March imports were assessed by Refinitiv at a four-month high of 49.26 million tonnes, equivalent to 11.65 million bpd, which is almost 1 million bpd above February’s 10.66 million bpd.

Saudi Arabia reclaimed its place as China’s top supplier with 8.08 million tonnes, or a share of 16.4%, edging out Russia at 7.95 million tonnes, or a share of 16.1%.

Russia and Saudi Arabia have vied for the top spot among China’s suppliers since Moscow’s invasion of Ukraine led to Russian oil exporters offering steep discounts to Asian buyers as their markets in Europe dried up as a result of sanctions.

While Russian volumes into China remain high by pre-war standards, it’s worth noting that Refinitiv data shows India competing with China for Russian cargoes loading at Pacific ports.

ESPO TO INDIA
India has also turned to cheap Russian oil, but has mainly bought the Urals grade, which loads at Russia’s western ports and then has to travel through the Suez Canal or around the bottom of Africa to reach India.

However, India bought some 400,000 tonnes of Pacific-loading ESPO crude in March, which in turn led China to import 1.56 million tonnes of Urals, a record high volume of this grade.

India’s crude imports rose to an 11-month high of 21.23 million tonnes, or about 5.02 million bpd, in March, with Russia supplying 34% of the total, or 7.29 million tonnes, which was a sixth straight record high.

Overall, China and India continue to drive Asia’s crude imports, but the rising share of Russian oil does raise the question as to the impact on other suppliers, and whether they are seeing reduced demand.

There are some areas of concern in Asia’s crude imports, with the region’s third-biggest buyer Japan taking just 10.67 million tonnes in March, or about 2.52 million bpd, which was the lowest since June 2022.

Lower refinery utilisation and a draw on oil inventories suggest that demand in Japan is soft and refiners are concerned about high prices.

Looking at other major importers, South Korea’s arrivals surged to a record high of 3.33 million bpd, and Singapore’s imports were also strong.

Taiwan’s dipped, but the main point of concern was the rest of Asia outside the top six importers, where arrivals dropped to 12.87 million tonnes in March, down from 14.36 million in February.

This suggests weakness in much of Southeast Asia and South Asia outside of India, and provides a counterpoint to the bullish China and India narrative.

The opinions expressed here are those of the author, a columnist for Reuters.

*Clyde Russel, Editing: Sonali Paul – Reuters