Macroscope | China’s record fuel exports show changing economic dynamics

Lost among the attention given to China’s record crude oil imports in December was the fact that the nation’s exports of refined fuels also hit an all-time high.

Crude imports surged 21.4 per cent in the final month of 2015 to hit 7.82 million barrels per day (bpd), taking the average for the whole year to 6.71 million bpd, another record and a gain of about 8.8 per cent, or 542,600 bpd, over 2014.

There is little doubt that China has been taking advantage of the relentless decline in crude prices to fill strategic and commercial stockpiles, a trend likely to continue this year, even if it may be at a slower pace given constraints on available storage tanks.

But the changing dynamics of the world’s No 2 economy are also having an impact on its domestic fuel consumption patterns, and by extension on its exports of refined products.

The biggest change is in middle distillates, where slower economic growth is cutting demand for diesel, which is often described as an industrial fuel given its role in rail and road transportation, and powering construction and other machinery.

Implied diesel demand in November dropped 7.8 per cent year on year, according to data compiled by Reuters.