Trades of Domestic Crude and Petroleum Products Changed in 2009     

Hit by the financial downturn, China's oil products demand grew slowly in 2009 - seldom in recent years. On the other hand, as refiners boosted production thanks to higher profitability and a number of new projects came on stream, the oil products market in China saw oversupply last year - also unusual - and oil products exports rose faster than imports.  

1   Import and export value of petroleum down

In a different situation against 2008, China's petroleum related trade fell in 2009. Import value dropped 31.7% to US$111 billion while export value fell 9.9% to US$16.58 billion. Petroleum demand did not recover well to grow in 2009 amid falling international crude prices, which also resulted in lower prices for petroleum related products. At the same time, oil demand by related industries either fell or grew slowly, resulting in a fall in both import and export value for petroleum.
   In 2009, China's crude oil import value fell 31.1% to US$88.9 billion, while export value declined 19.3% to US$2.22 billion. The import value for oil products declined 44.7% to US$16.56 billion, while export value decreased 8.2% to US$12.55 billion.
   Though the financial crisis has affected the start-up of some new and expansion refining projects in China in 2009, there were still 40 million t/a of capacity came on stream last year, bringing the nation's total refining capacity to 490 million t/a. Meanwhile, as China improved its pricing mechanism for refined fuels and the profitability in the refining sector got better, China's refineries initiated actively to process 374 million tons of crude in 2009, up 7.8%. On the other hand, the demand growth for petroleum products has shrunk. The apparent consumption of gasoline, diesel and aviation kerosene stood at 207 million tons, slightly up 0.9%, the smallest growth rate since 1999. To ease the oversupply, China boosted the exports of major oil products.

2   Import and export amount of oil rose

Domestic crude oil output totaled 190 million tons in 2009, down slightly 0.4% from a year earlier. Import amount of crude increased 13.9% to 204 million tons; export amount of crude jumped 38.9% to 5.184 million tons. The crude net import amount rose 13.4% to 199 million tons. Based on an apparent consumption of 388 million tons, China's reliance on imported crude exceeded the 50% level, reaching 51.2%.
   By crude origin, China's imported 96.21 million tons of crude oil from the Middle East in 2009, up 7.4% from a year earlier and accounting for 47.7% of the total, compared with 50.1% in 2008.
   China has been actively exploring for crude supply sources beyond the Middle East. And Africa has become the key source after the Middle East for China. Import amount of crude from Africa rose 12.6% in 2009 to 60.47 million tons, about 30% of the total. Among them, Angola and Sudan were the main suppliers, taking 51.9% and 19.2% of the Africa imports.
   Import amount of crude from the Asia-Pacific region reached 14.54 million tons in 2009, 1.4 times that of a year earlier, with South Korea, Malaysia and Indonesia being the main contributors of the increment. Import amount of crude from South Korea reached 2.09 million tons, up 220%, while import amount of crude from Malaysia surged 180% to 2.53 million tons and import amount of crude from Indonesia jumped 130% to 3.06 million tons.
    By country of origin, Saudi Arabia, Angola, Iran, Russia and Sudan are the top five countries for China's crude imports. In 2009, China imported 41.71 million tons of crude oil from Saudi Arabia - accounting for 20.7% of the total - an increase of 14.7% from a year earlier. As Angola crude contains less sulfur than Saudi oil, it is more favored by Chinese refineries. As a result, import amount of crude from Angola have rising steadily in recent years. Import amount of crude reached 31.39 million tons in 2009, up 5.4% from a year earlier and accounting for 15.6% of the total. Iran sold 23.1 million tons of crude - mainly heavy oil - to China in 2009, up 8.4% from a year earlier and accounting for 11.5% of the total. And thanks to the falling freight costs, crude imports from Russia by sea rose substantially in 2009, while imports by railway or via pipeline remained flat. Russia exported 12.45 million tons of crude to China, up 5.4% from a year earlier and accounting for 6.2% of the total. Sudan shipped 11.9 million tons of crude - the typical heavy, high sour crude - to China in 2009, up 13.7% from a year earlier and accounting for 5.9% of the total. Sudanese crude has become a good choice for refineries seeking to lower costs because its prices are far below the average oil prices in global markets. These five countries accounted for 59% of China's total crude imports, while the top 10 countries of origin made up 80% of the total.
   China's crude oil exports have remained low in many years. China imposes a license system to regulate the crude export business. The export quota was 5 million tons in 2003, and it was lowered to 1 million tons in 2005. China National Offshore Oil Corporation, by the way of Sino-foreign oil share cooperation, is the main crude exporter in China.
   South Korea, Singapore, Japan and the United Stated were the main buyers of Chinese crude in 2009. Export amount of crude to South Korea totaled 1.63 million tons, up 153%, while export amount of crude to Singapore jumped 124% to 780 000 tons. Export amount of crude to Japan fell 36.7% to 740 000 tons and export amount of crude to the United States reached 720 000 tons, up 25.4%.

3   Oversupply for petroleum products, export growth outperforms import

China's auto industry is booming. Domestic vehicle sales jumped 45.5% in 2009 to 13.62 million units thanks to the government's fiscal stimulus package, a car trade-in program and tax reduction measures. However, gasoline consumption only rose 7% last year. In 2009, the nation's gasoline production rose 13.1% to 71.948 million tons, imports stood at only 44 000 tons, up 13.1% from a year earlier but far below 2008's 1.98 million tons. Export amount of gasoline soared 143% to 4.94 million tons.
   Indonesia, Singapore and Vietnam have long been the top three export destinations for Chinese gasoline. The gasoline sold to Singapore is mainly used as the blending component of high standard gasoline. And Vietnam has cut the import duty from 35% to 25% in March 2009, and to 20% in September, helping to lift oil products imports. China shipped 1.93 million tons, 2 million tons and 510 000 tons of gasoline to Vietnam, Singapore and Indonesia respectively in 2009, surging 148%, 119% and 726% from the previous year.
   Before 2009, as domestic economic expanded robustly, diesel consumption always grew faster than gasoline, which has resulted in a tight supply for diesel. To ease the supply gap, refineries lowered gasoline production to increase diesel output and also imported more diesel. Domestic diesel production increased 6% to 140 million tons in 2009. As economic growth slowed in 2009, the consumption growth for diesel also shrank. To be more specific, consumption of diesel used by cars and ships had small growth, while that in the power industry declined. The diesel apparent consumption was 139 million tons in 2009, slightly down 0.2% from a year earlier. China imported 1.837 million tons of diesel in 2009, down 70.6% year-on-year; exports surged 617% to 4.507 million tons.
   Russia, South Korea, Japan and Taiwan province were the core origins for China's diesel imports in 2009, supplying 690 000 tons, 350 000 tons, 240 000 tons and 230 000 t