UPDATE 3-China's H1 crude imports drop, threaten global oil demand growth

Wed Jul 10, 2013 12:04pm BST

Quotes

   

* First-half imports drop 1.4 pct on year to 5.57 mln bpd

* June imports at 5.39 mln bpd, down 4.4 pct from May

* Expectations had been for rise after April-May maintenance

* June imports up 2.1 pct on year, but lowest in nine months (Adds comments, rise in 1H imports last year due to SPR buildup)

By Judy Hua and Manash Goswami

BEIJING/SINGAPORE, July 10 (Reuters) - China's crude imports fell in the first half of 2013 compared with a year ago, raising the prospect that slowing growth in the world's second-largest economy may lead to lower-than-expected global fuel consumption this year.

With oil imports dropping and China warning of a "grim" trade outlook on Wednesday, the world's second-biggest oil consumer may not be the buoyant force it has been for oil markets in the past decade.

"There is most certainly a risk that global oil demand growth will miss forecasts because of the slowdown in China," said Ben Le Brun, an analyst at OptionsXpress in Sydney.

"And it will be not just oil, but most other commodities. The global forecasting agencies may have to play a bit of a catch up," he said.

The International Energy Agency trimmed its oil demand growth forecast for China in its monthly report in June due to slowing economic growth, but still expected Chinese fuel demand to account for nearly half of this year's rise in global consumption of around 790,000 barrels per day (bpd).

China's crude imports for January to June fell 1.4 percent from the same period last year to 5.57 million bpd, customs data showed on Wednesday, with analysts warning China's slowing economy could drag on oil arrivals the rest of the year.

Inbound shipments were down 4.4 percent from the previous month on a daily basis at 5.39 million bpd, the lowest monthly import rate since September of last year.

SOFTENING DEMAND

"If you bring it in line with the recent set of numbers out of China, the oil import data gives you a picture of softening demand," said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt's Bulletin.

Imports in January-June are also down from last year because in the first six months of 2012 China was filling its strategic petroleum reserves (SPR), said Amrita Sen at Energy Aspects.

Crude imports in the first half of last year rose 11 percent on the year to 5.62 million bpd, and touched a record 6.0 million bpd in May.

Yet, China's crude imports had been expected to rise this year as new refineries came onstream, but with fuel demand weakening as the economy slows, there is no need for these units to run at full throttle.

In May this year, China's implied oil demand edged up around 1 percent from a year earlier, the lowest rate in nine months, while the 4.5 percent growth rate in 2012 was the slowest in four years.

The month-on-month fall in June's crude imports dashed expectations for a rise in imports after Chinese refineries returned from maintenance in April and May.

China's refinery production has gained a tepid 2.9 percent in the first five months of the year, while traders said a lack of new strategic petroleum storage has also contributed to slowing purchases.

"Chinese refineries are not running at full rates as fuel demand in China and from neighbouring countries in Southeast Asia is not good," said a Sinopec official, who declined to be named due to company policy.

Existing refineries have refrained from aggressively raising throughput, and a new refinery operated by PetroChina , the 200,000-bpd Sichuan plant, delayed its start-up previously scheduled for mid-April.

"China's oil demand is already not so strong and it has been partly met by oil products imports, which are pretty strong this year," said Kang Wu, senior adviser at energy consultancy FGE.

June crude imports were 22.17 million tonnes, or 5.39 million bpd, up 2.1 percent from the same month a year ago, the customs data showed.

China's oil demand is expected to grow to 9.96 million bpd in 2013, up 3.75 percent from 9.6 million bpd last year, according to the IEA. (Addtional reporting by Florence Tan and Jessica Jaganathan in Singapore; Editing by Tom Hogue and Simon Webb)