China's crude oil imports in June fell to the lowest monthly level so far in 2012 at 21.72 million mt, or an average 5.31 million b/d, despite posting a 10.3% year-on-year increase, customs data released Tuesday showed.
This was an 11.8% drop from the record 6.02 million b/d posted in May, and also lower than the 5.44 million b/d posted in April.
Analysts had earlier said Chinese refiners would likely draw down high levels of crude inventories in June. Refiners were also expected to cut runs in the month due to high levels of product stocks and weakening demand.
"The June crude import volumes are lower than I expected, and I think this is basically an indication of the weak market," said Kang Wu, analyst and senior adviser at FACTS Global Energy.
"Additionally, all the macroeconomics is supporting this data," he added, referring to June manufacturing data released recently, which suggests a continued slowdown in the economy.
In a surprise move, the People's Bank of China cut the one-year deposit rate by 25 basis points and the one-year lending rate by 31 basis points from July 6, indicating more headwinds on the horizon for the economy.
China is set to release more first half economic data on Friday, including GDP growth numbers. The National Bureau of Statistics is also set to release refinery throughput figures the same day.
Crude imports were expected to ease off the historic high seen in May as refiners likely drew down stocks last month. Refinery runs contracted 0.7% year on year to 38.33 million mt (9.06 million b/d) in May, leaving excess crude supply outside the refining system at an average 1.04 million b/d, strongly suggesting crude was being shifted into storage.
"Certainly there was some inventory injection in May and this could help explain the lower imports in June," said Kang.
JP Morgan pointed out Monday in a research note that while oil demand growth has moderated as the Chinese economy has slowed this year, June's growth figure could be much stronger because of the low base last year.
"Following Brent crude pushing over $125/barrel in April 2011, crude imports and refinery output were extraordinarily weak in June 2011. Net crude imports declined 670,000 b/d year on year... and refinery output dropped to 8.7 million b/d versus 9.1 million b/d the previous month," the bank said.
China's overall crude oil imports for the first half of the year still grew a robust 11% on year to 140.07 million mt (5.64 million b/d), according to the customs data. This outpaced crude import growth of 7% in H1 2011.
Crude oil exports in June fell more than 59% year on year to 110,000 mt, with H1 crude exports, at 1.28 million mt, dipping 1.6% year on year.
For oil products, total imports in June fell 13.8% year on year to 2.93 million mt, with H1 imports falling 3.8% year on year to 20.22 million mt.
Oil product exports in June edged up 1.5% year on year to 2.07 million mt, with January-June exports falling 9.2% year on year to 11.86 million mt.