Souq.com expects to double its sales during this year’s annual event, compared with its 2014 editionNovember 25, 2015 9:59
China buys 18 mln bbls MidEast crude H1 Nov -trade
Zhuhai Zhenrong also books VLCC from Middle East.
October 26, 2010 12:50 by Reuters
Chinese oil firms bought as much as 18 million barrels of Middle East crude in a single swoop, traders said on Tuesday, as the world’s No. 2 energy user sustained a high level of imports while prices remained attractive. China has stepped up its crude oil purchases in the past two months, importing a record of 5.67 million barrels per day (bpd) in September, due to a surge in domestic fuel use and increased stockpiling by domestic energy companies.
“This is really quite unusual for this many vessels to be booked by just one company,” said a Singapore-based crude tanker trader. “China is obviously buying up as much as it can, but I don’t know why.”
Unipec, the trading arm of China’s Sinopec , booked eight very large crude carriers (VLCCs) to load from Nov. 2-12, shipbrokers said.
State-run firm Zhuhai Zhenrong also chartered a VLCC from the Middle East during the same period, which traders said was most likely a term cargo.
The VLCCs, each of which can carry as much as 2 million barrels of crude, were a mix of term and spot barrels, traders said.
The record influx of crude oil into China last month surpassed the needs of the country’s refining sector, leaving an apparent surplus of 1.5 million bpd, a Reuters analysis of Chinese data showed.
The contract for Unipec’s purchases is based on a fixed route from only one Middle East supplier, a shipping source said, indicating the oil could be destined for the country’s new strategic reserve tanks.
But other traders said the bulk buying was not unusual for China. It was only surprising because it was publicly reported in an otherwise opaque shipping market.
“The number of VLCCs is not surprising. They usually book around 14, and sometimes even as high as 16 VLCCs a month,” said an Asia crude trader. “Suppliers’ loading schedules are tight this time, so they have to book those VLCCs at one go.”
The Middle East crude market has recovered over the past two months from their lows in August on rising winter demand and improving refining margins.
But Gulf crudes are still considered attractive, especially when the front-month Brent-Dubai Exchanged of Futures for Swaps (EFS) remained high at around $2.50 a barrel, while a weak dollar and a strong yuan may also help boost Chinese crude purchases.
In the freight market, China’s buying spree has failed to boost rates on the VLCC benchmark Middle East to Japan route. Oversupplies of unchartered vessels have kept rates at around $10,000 a day, just enough to cover operating costs for some companies.
(Editing by Ramthan Hussain)