Accumulated domestic crude oil
supply/demand balance, that deducts processing volume from the total supply of
net imports and productions, reached 23.4 million metric tons in Jan-May 2018,
according to the government stats. That throughout 2017 was 44.6 million mt.
The monthly balance rarely shows negative figures and total accumulation since
Jan 2006 attains 270 million mt.
However, China's National Bureau of
Statistics said that strategic petroleum reserves in the nation are only 37.73
mt as of mid-2017. This volume was higher than a year ago by 4.48 million mt
and the International Energy Agency estimated that China's SPR stood at 39.2
million mt as of end-2017.
Meanwhile, commercial crude oil inventories
in China as of end-2017 were estimated at 27 million mt by Xinhua News. The
latest figure as of end April 2018 was 27.4 million mt. The commercial crude
oil inventories have been swung between 25 and 35 million mt during the 2010's.
It is basically under the downward tendency after peaked in Sep 2014. Petroleum
products inventories are also indicating a seasonal cycle and no significant
upward trend is seen.
Therefore, the statistically calculated
crude oil surplus is clearly larger than the actual increase in the stockpile.
It is a mystery where the surplus is gone. Many people believe that Chinese
stats are not reliable, but even that, the discrepancy looks too large.
Crude oil processing volumes released by
the NBS are about 50 million mt recently. These figures are the sum of collected
data from enterprises that have more than 5 million RMB of annual sales. Since
oil refiners are unlikely to have less than US$0.8 million of annual sales, the
processing volume could cover all eligible firms. Additionally, it is not
realistic to estimate that those firms report much smaller production than they
actually do.
Current estimated total of the strategic
petroleum reserves and commercial oil inventories in China are close to 90
million mt. It equivalents to about 55 days of the nation's recent consumption
volume. Although this level is still far from 90 days that is recommended by
the OECD, a significant progress is seen as Chinese petroleum demand has
doubled from a decade ago when its stockpile only covered less than a month of
consumption.
On the other hand, China may have equipped
nearly its 170 days of consumption equivalent petroleum stockpiles based on the
above surplus calculation. However, we can't find their storage facilities for
such large volume. Thus, it is reasonable to guess that import figures are
overblown. Based on the discrepancy among estimated stockpiles, China's actual
crude oil imports are likely to be below the customs reported volume by about
10%. Chinese influence in the global crude oil market should be discounted.
