China July fuel oil imports hit by high prices, LNG

Shanghai, August 14 (Gasgoo.com) China imported an estimated 1.95-2.0 million tons of fuel oil in July, down 17-19% from official June levels, as rising cargo prices hurt demand and domestic utilities use more of liquefied natural gas (LNG), Reuters reported today.

August imports are expected to fall further to 1.5-1.8 million tons, traders said. Import volumes for July are likely to be flat to 3% higher than a year earlier. According to official customs data, June imports stood at 2.42 million tons, up from May's 2.36 million tons.

Cargo prices have hit new highs in the past few weeks, driving up import costs for teapot refiners, as expectations of tighter supplies from global refinery run cuts buoyed market fundamentals. The independent Chinese refiners, dubbed teapots due to their small to medium sizes, are located mainly in the northeast.

Traders estimate that teapots, which are restricted from importing crude as they are not state-owned, buy at least 800,000 tons of straight-run fuel oil every month. July's fuel oil supplies are expected to hail mainly from Venezuela, Malaysia, Singapore and Russia.

Reinforcing the trend of lower fuel oil imports, domestic power plants are switching more to LNG for power generation as the super-chilled gas does not attract government tax and is more environmentally friendly, Reuters said.