Brief: China's February Crude Imports

Mobius Intel Brief:

China’s February crude imports fell 1.7% Y/Y to 10.95 MMb/d, marking the 10th negative annualized monthly change in the last fourteen months.

Key Intel

• Uncertainty about China’s crude demand growth potential has escalated since mid-2023, when China’s three-month rolling average imports hit a peak of 11.8 MMb/d in Aug ‘23.

• While China’s February imports gained nearly 14% M/M from January’s 9.61 MMb/d, February’s data brought China’s three-month rolling average imports to 10.6 MMb/d—the lowest 3M average since November 2022 and over 500 kb/d below December’s 3M avg of 11.16 MMb/d.

• Demand has largely held in a range between 9.5 MMb/d and 11.5 MMb/d since 2019, reinforcing doubts about China’s role as the global crude market’s demand growth driver for the next half decade.

• These doubts are further substantiated by China’s prioritization of electric vehicles and non-petroleum-derived energies that will mitigate potential strategic risks from the outsized share of China’s crude imports that pass through the narrow Strait of Malacca.

Takeaways

• Conflict risks between China and Taiwan, as well as escalatory actions throughout the South China Sea, suggest the CCP will likely aim to further minimize its reliance on crude imports through the Strait of Malacca. As a result, global crude market participants will likely require clear demand growth signals from developing economies like India to support sustained bullish expectations from 2025 onwards.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation with respect to the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is exclusively intended for Mobius clients and is not considered promotional material.