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China's Crude Imports Hit Multi-Year Low as Refining Activity Eases, TPH Says

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China's crude oil imports fell in May to 7.8 million barrels per day, the lowest level since October 2017, as disruptions linked to the Middle East conflict and weaker refining economics weighed on demand, TPH Energy strategists said in a note Tuesday.

Matthew Blair, analyst at TPH, said crude arrivals dropped to 7.8 million b/d, down from 9.4 million b/d in April, 11.8 million in March, and 12.6 million in February.

The May figure marks the weakest level since October 2017, reflecting what TPH analysts described as a pullback in demand following disruptions linked to the ongoing conflict.

The decline in feedstock availability has filtered through to refinery operations.

TPH said state-owned refiners saw utilization rates drop to 67% in May from 70% in April, and significantly lower than 78% in March and 82% in February.

Meanwhile, the bank said independent "teapot" refiners were more resilient but still eased to 54% from 55% over the same period. Early June data suggests utilization holding at 67% for state-run plants and slipping further to 51% for teapots.

Blair said that Chinese refiners are increasingly operating under margin pressure, with elevated crude costs contributing to reported losses across parts of the sector.

Despite weaker run rates, China's net refined product exports rose modestly to 489,000 b/d in May from 320,000 b/d in April. However, TPH said that the composition of those exports appears to have shifted. April data suggest shipments were skewed toward jet fuel and fuel oil, with minimal volumes of gasoline and diesel.

On the margin side, TPH said that refining economics remain relatively supportive in Asia. Singapore 2-1-1 refining cracks eased to $42 per barrel so far in June, down from $45 in May and a recent peak of $68 in April, though still elevated versus March levels of $59.

TPH analysts said the sustained strength in Singapore cracks is most directly supportive of US refiner PBF Energy (PBF), which remains a key beneficiary within its coverage universe.

Price: $40.35, Change: $-2.02, Percent Change: -4.77%

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