China's crude oil imports remained weak, as expected, in July, edging up a mere 0.9% to 8.83 million b/d from the 47-month low in June amid destocking activity and slow domestic demand recovery, data from the General Administration of Customs showed Aug. 7.
The increase in inflows in July was contributed by independent refineries which lifted their crude imports by 25.4% to 3.16 million b/d, from 2.52 million b/d in June, according to S&P Global Commodity Insights data.
Meanwhile, their state-owned peers are more likely to continue reducing spot purchases to consume their stocks.
According to Kpler shipping data, China's crude stocks stood at an 11-month high of 945 million barrels in May, accounting for 63% of the country's crude storage capacity that Kpler monitors.
With the slump in crude imports, stocks fell further to 913 million mt in July from 940 million barrels in June, the Kpler data showed.
"The destocking activity will last until September, when peak oil demand season finally starts," a London-based analyst said. "So, we expect China's crude imports are unlikely to see a notable rebound until then."
Typically, China's peak oil products consumption occurs over September and October during the Mid Autumn Festival and the week-long National Day holidays, boosting gasoline and jet fuel demand for travel purposes. Autumn is also the season for harvesting, fishing and construction activities that drive gasoil demand.
But in August, as more and more infections were found in tourist destinations, including Xinjiang and Hainan, movement controls had hurt gasoline and jet fuel demand recovery during the summer holiday.
In the first seven months of the year, China's crude imports slipped 4% year on year to 289.84 million mt, or 10.02 million b/d, the data showed.
China's crude oil imports in H2 will feel the pressure of bulging domestic inventories, an uncertain demand recovery and oil product exports restrictions -- factors that could dim chances of any robust growth in feedstock inflows.
Market analysts have penciled a flat or even a decline in China's crude imports for 2022. The country imported 10.30 million b/d of crude in 2021, down 5.1% from 2020, the GAC data showed.