Citigroup Inc. recently provided a commentary on China’s energy import numbers, shedding light on their implications for the country’s economic circumstances. While some may interpret the higher energy import figures as a sign of a strong macro recovery, Citigroup emphasizes that this may not necessarily be the case.
Although Chinese macro data showed signs of stabilization in August, Citigroup cautions that there are underlying weaknesses in the Chinese economy that cannot be overlooked. While competing energy analysts argue that the robust imports of oil, natural gas, and thermal coal indicate a rebound, Citigroup predicts that energy prices will soften throughout the rest of 2023.
It is important to note that despite August’s increase in crude imports from 10 million b/d to 12.5 million b/d, Citigroup points out that import figures have displayed volatility since April. Moreover, the heightened prices and larger inventories within China may lead to reduced crude and petroleum product imports, potentially resulting in an increase in product exports.
Furthermore, the intense summer heat contributed to a significant 6.6% monthly surge in natural gas imports, which amounted to an impressive 24.1% year-on-year growth. This upswing in natural gas imports highlights the ongoing demand for this energy source within China.
Looking ahead, Citigroup identifies November as a pivotal month to monitor closely. In August, property sales at 30 major Chinese cities experienced a decline of 7%, marking a 30% decrease on a year-on-year basis. However, with support policies aimed at boosting property values planned to take effect in November, it is a crucial period that could potentially have a significant impact on the overall economic landscape.
In conclusion, while China’s energy import numbers may suggest a rebound at first glance, Citigroup warns against viewing these figures as a clear indicator of a robust macro recovery. By considering the persisting weaknesses in the Chinese economy and anticipating potential shifts in energy prices and property sales, it becomes evident that a comprehensive analysis is essential for a true understanding of China’s economic situation.
Crude Import Levels Expected to Fluctuate in 2023
According to bank analysts, crude oil import levels in 2023 have been fluctuating between 10 million b/d and the mid-12-million b/d range. The Citi commodity team suggests that China has completed most of its strategic stockpiling, which could result in lower imports for the rest of the year. Shiptracking data analyzed by the bank indicates that September imports are likely to be around 10.8 million b/d, reflecting a decline in both Russian and Saudi Arabian arrivals.
Surge in Product Exports
In contrast to import trends, product exports have experienced significant growth, reaching their highest level since February with August departures amounting to 1.45 million b/d. Citi attributes this increase to exporters capitalizing on robust regional crack spreads.
- June exports: 1.1 million b/d
- July exports: 1.3 million b/d