China’s increasing demand in oil is directly affecting the crude oil tanker shipping industry by requiring 45 more VLCC’s to support the growth in demand for crude oil so far for 2017, a BIMCO analysis said.
This increase in demand is equivalent to an additional demand of 33 million tonnes of crude oil, meaning that more that 0.9 million barrels are needed per day on average during the first three quarters of 2017.
According to BIMCO’s Chief Shipping Analyst, Peter Sand, China’s needs for crude oil imports are more than welcomed by the tanker shipping industry, but the market is already full with tonnage and therefore supply still surpasses demand.
He continued by saying that better rates are expected in the November – January period but he doesn’t expect the same rates as last peak season, as the fundamentals have weakened.
The countries exporting larger amounts in 2017 are most notably Angola, Brazil, Venezuela, United Kingdom, Republic of Congo and United States (US).
Angola has surpassed Saudi Arabia in 2017 in terms of volume, after being second in 2016 and 2015. This will most likely also be the case by the end of 2017 as Saudi Arabia historically exports the largest amount of crude oil to China in the first half of the year, BIMCO says.
Furthermore, Angola has been the country generating the largest amount of tonne miles in the past three years and has further established itself as the most dominant partner in 2017.
Additionally, BIMCO noted the rise in the US export in particular after not exporting anything to China in 2016 and 2015.
US crude oil to China is exported over long distances from the East and Gulf Coast, something that is more significant for the crude oil tanker shipping industry than e.g. Russia, due to the high tonne miles generated.
Russia has exported almost five times more crude oil via the sea than the US during the first nine months of 2017 but generated 60% less tonne miles than the US. Shipping has played a major role in the increase of Russian exports to China.
In 2015, Russia exported 40% of all its crude oil to China via the sea. This has increased to 51% so far for 2017, though the benefit for the crude oil tanker shipping industry remains limited due to the short sailing distances, BIMCO reports.
According to BIMCO calculations, average distance per tonne of crude oil imported by China has increased in 7,500 nautical miles in 2017. This increase is welcomed by the crude oil shipping industry, as tonnage is tied up for a longer period.
China’s export of refined oil products has increased by 8% in the first three quarters of 2017 compared to the same period in 2016. This may indicate that China imports crude oil not only for domestic use.
Countries importing Chinese refined oil products are close to China geographically, such as Singapore, Hong Kong, Philippines and Malaysia. Due to the short sailing distances, the Chinese export of refined oil products does not generate high tonne miles, however, some of the oil products may be traded on to other destinations, BIMCO adds.
