China's imports of crude oil in June fell to their lowest level since December 2011, coming off a record high in May and ahead of lower refinery operating rates expected in the third quarter.
The imports contributed to China's trade surplus in June, which widened to $31.7 billion from $18.7 billion in May due to weak import growth. The trade surplus was wider than expected and is a possible indication that domestic demand in China, which has been a crucial support to the global economy, is weakening.
China imported 21.72 million metric tons of crude oil in June, equivalent to 5.3 million barrels a day, according to preliminary data Tuesday from the General Administration of Customs. This was down from May's record 6.02 million barrels a day.
Imports were still 10.3% higher than the 19.7 million tons of crude shipped in during the corresponding month last year but down 14.8% from 25.48 million tons imported in May, according to Dow Jones Newswires' calculation.
China's refineries may process less crude in the third quarter due to weaker domestic demand for diesel, which has led to persistently high stockpiles and steady exports from the country's largest refiner, China Petroleum & Chemical Corp. (>> China Petroleum & Chemical Corporation), or Sinopec Corp.
The country's crude throughput declined in both April and May, falling 0.3% and 0.7%, respectively, compared with the corresponding months a year earlier.
Weaker demand for diesel, a primary driver of refinery output, has tracked China's economy, which has slowed for five consecutive quarters. Manufacturing activity in June grew at its slowest pace since November.
High diesel inventories have led Sinopec's trading arm, China International United Petroleum & Chemicals Co., or Unipec, to export due to insufficient storage space, said a Beijing-based trader familiar with the matter.
Meanwhile, independent refining rates in eastern Shandong province were at 30.3% as of July 5, up 4.6 percentage points from a week earlier but still down 14.7 percentage points from a year earlier, Shandong-based energy consultancy Oilchem.net said. The majority of independent refineries are located in Shandong.
China's refined oil product imports in June totaled 2.93 million tons, while exports totaled 2.07 million tons, the data showed.
China also exported 110,000 tons of crude in June, according to the preliminary data.