04 December 2018, News Wires — China imported its first U.S. crude oil cargo in around two months last week, according to industry sources and Refinitiv Eikon data – a deal made by an independent “teapot” refiner as larger players held off amid trade tensions.
Chinese buyers have largely avoided U.S. oil during the two countries’ trade war, fearing the imposition of tariffs. China had risen to become the largest importer of U.S. crude oil in 2018 before cutting off shipments as the trade war escalated.
The world’s two largest economies agreed over the weekend to stop imposing new tariffs on each other’s goods for 90 days, though Chinese oil traders said they were still wary and looking for direction from Beijing.
Independent refiner Shandong Yuhuang Petrochemicals received its first-ever U.S. crude shipment last week, a company executive said.
“We decided to buy this U.S. cargo as it has good value for money,” said the executive, who declined to be named due to company policy.
For the first seven months of 2018, China imported an average of 377,700 barrels of U.S. crude per day (bpd), according to U.S. Energy Department figures, surpassing Canada as the biggest foreign buyer of U.S. barrels.
But crude imports from the United States slumped to the lowest in more than two years after Beijing threatened to impose tariffs in August – even though it later took U.S. crude off its sanctions list.
Chinese customs data last recorded imports from the United States in September and a search in its database did not show any imports in October.
The White House said in a statement on Sunday that Beijing had now agreed to buy an unspecified but “very substantial” amount of agricultural, energy, industrial and other products.
Still, Chinese buyers remained wary, waiting for further instructions from Beijing.
“We’re still gauging the policies… It’s only a 90-day window,” a Chinese oil buyer said, adding that the oil could arrive between January and March.
Very Large Crude Carrier New Courage discharged about 1 million barrels of Southern Green Canyon crude at Lanshan in Shandong province on Nov. 28, Refinitiv Eikon data showed.
Unipec had chartered the super tanker to ship American oil to China. New Courage first called at Cezi Island in Zhoushan, Zhejiang province, where it offloaded on Nov. 23 about 260,000 barrels of Latin American crude, according to the data.
Sinopec, the parent company of Unipec, declined comment.
The Chinese oil buyer added that U.S. Mars crude which has been offered at about $2 a barrel above Dubai quotes for delivery to north Asia remained uncompetitive with Middle East oil.
But West Texas Intermediate (WTI) Midland which was recently sold at about $2 a barrel above dated Brent could work, he said.
Unipec and Royal Dutch Shell Plc are seeking to book supertankers to load crude in the U.S. Gulf Coast in late December for China, traders said, but added that these ships have options to be diverted elsewhere in Asia.
- Reuters
