Lower Oil Prices Are Fueling China’s Import Spree

• China's crude oil imports surged to a 1-year high of 11.56 million bpd in August, rebounding from a 2-year low in July.
• The increase in imports coincided with a drop in international oil prices, suggesting a potential link between price and purchasing behavior.
• While the rebound could be partly attributed to seasonal demand, China's tendency to buy commodities at lower prices raises questions about the underlying strength of demand.

China imported in August the highest monthly volume of crude oil for a year as purchases increased with the fall in international oil prices when cargoes were contracted.  

Chinese crude oil imports jumped to 11.56 million barrels per day (bpd) in August—the highest level since August 2023 and a major rebound from the July low of 9.97 million bpd, per official Chinese data reported by Reuters columnist Clyde Russell.   

The July imports of crude into China were the weakest in two years. Crude arrivals rebounded in August, but they were still 7% lower than in August 2023. 

Moreover, Chinese crude oil imports fell by 3.1% in January to August 2024 compared to the same period of 2023. 

China’s crude import data for August cannot give a definite answer to the question that many analysts have been pondering over this year—whether Chinese imports reflect an uptick in demand or Beijing’s propensity to contract more volumes when oil prices are lower. 

The imports in August were likely contracted in the May and June windows, when international crude oil prices were falling, Reuters’s Russell notes. 

Brent prices were down in May and June from the high of over $90 per barrel in early to mid-April—the highest so far this year. 

The rebound in China’s imports in August could be attributed in part to seasonal demand patterns, as importers tend to increase purchases during the third quarter to stockpile fuel for peak winter demand.  

But part of the recovery could be attributed to the lower oil prices. 

China’s propensity to stock up on commodities at lower prices could explain why most commodity imports have seen higher imports despite the economic growth faltering below expectations.

With China’s apparent oil demand weaker than expected, the lower international prices may have played a bigger role in Chinese purchases for August.  

By Tsvetana Paraskova for Oilprice.com

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