China's surplus crude oil surges in June, giving refiners options
China's surplus crude amounted to 1.42 million barrels per day (bpd) in June, up from 1.40 million bpd in May and the fourth straight month above the 1 million bpd level, according to calculations based on official data.
For the first half of 2025 China's surplus crude amounted to 1.06 million bpd, as strong second quarter oil imports overcame a soft start to the year.
The volume of crude flowing into inventories gives Chinese refiners options in coming months, as they can choose to trim imports if they deem that oil prices have risen too quickly as a result of the Israel-Iran conflict last month.
China does not disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total of crude available from imports and domestic output.
Refiners processed 15.15 million bpd in June, according to Reuters calculations based on official data released on Tuesday, up 8.8% from May and the highest rate since September 2023.
The world's largest importer of crude oil saw arrivals of 12.14 million bpd in June, the highest daily rate since August 2023, and up 7.1% from May.
Domestic oil production was 4.43 million bpd in June, up from 4.35 million bpd in May.
Putting June imports and domestic output together gives a total of 16.57 million bpd of crude available to refiners, leaving a surplus of 1.42 million bpd once refinery throughput of 15.15 million bpd is subtracted.
It is worth noting that not all of this surplus crude is likely to have been added to storage, with some being processed in plants not captured by the official data.
But even allowing for gaps in the official data, it is clear that from March onwards China has been importing crude at a far higher rate than it needs to meet its domestic fuel requirements.
China has built up a track record of importing more crude than it needs when it believes prices are low, but pulling back when prices rise.
The surge in imports in the second quarter came against a backdrop of declining crude prices when the cargoes would have been arranged.
Global benchmark Brent futures dropped from a high of $75.47 a barrel on April 2 to a four-year low of $58.50 on May 5, a period during which cargoes that arrived in the second quarter would have been secured.
Conversely, China's soft crude imports in the first quarter came after prices were rising during the window when those cargoes would have been bought.
Brent went from a low of $70.85 a barrel on December 6 to a six-month high of $82.63 on January 15, meaning China's refiners were facing rising import costs for cargoes arriving in the first quarter.
Brent prices have been volatile in recent weeks amid the brief conflict between Israel and Iran in June, which was later joined by the United States.
Brent reached a six-month high of $81.40 a barrel on June 23 and has since moderated to end at $68.71 on Tuesday, as concern mounts over the global economic impact of the higher import tariffs promised by U.S. President Donald Trump.
This volatility may result in China's refiners easing back on import volumes in August and September, but much still depends on whether the June spike remains a brief blip higher amid an overall declining price trend.
Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab.
The views expressed here are those of the author, a columnist for Reuters.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
4 hours ago
- The Guardian
Australian defence force fails to meet recruitment targets but numbers improving
The Australian defence force has failed to meet its latest recruitment targets despite recording the highest recruitment and retention levels in more than a decade. The ADF enlisted 7,059 full-time personnel in the 2024-25 financial year, the highest annual intake in 15 years, but still fell more than 1,000 short of its target for that year. According to the Department of Defence's incoming government brief, released under freedom of information laws, the recruitment target for the last financial year was 8,105. The figures also show fewer than 10% of applicants to the ADF in the last financial year were hired, with some dropping out due to the drawn-out recruitment process and many not meeting its strict standards. Sign up: AU Breaking News email More than 75,000 people applied to join, while just 7,059 permanent roles were filled. The government has acknowledged some applicants had dropped out or found other work, and that its commercial contract with the recruitment company Adecco has had 'teething issues'. 'As we've been trying to streamline that recruitment process, there were some teething problems with our new recruitment partner,' said the minister for defence personnel, Matt Keogh. 'I have lent in very hard … to get them back on track with applicant care as well as making sure that in doing the assessment of medical and psych appointments that they are able to be accessed more promptly. 'This has now seen great improvement, we're a long way there, we've still got a little bit more to go.' As of 1 July, the full-time ADF workforce was at 61,189 people. The latest data, provided by the defence department, shows retention has also improved, with separation rates dropping to 7.9%, after sitting between 9% and 11% since 2012. The defence force has a target of 69,000 personnel by the early 2030s, to respond to rising geopolitical tensions. At Senate estimates in June 2024, the chief of defence told the hearing that on 1 May that year the ADF workforce was 4,400 personnel short, with the total workforce at 58,284 people. Despite the shortfall in reaching the recruitment goal for the last financial year, the government said recruitment was now on track to meet the 69,000 target. The government said some of that improvement had come from targeted social media campaigns for Australians aged between 17 and 24 in what Keogh called 'smarter' advertising. 'Doing that advertising in games, in computer games, utilising TikTok, making sure that we're focusing on having that advertising presented where our target age groups are so they are seeing those messages,' Keogh said. 'Advertising [is also] targeted at those key influencers of our potential enlistees, our young people – so people like parents and teachers.' Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion The ADF is also recruiting from overseas, though its program to recruit from Five Eyes partners has started slowly. So far just three New Zealanders have joined the ADF, with a further 70 in the pre-enlistment stage, meaning they could be undergoing fitness tests or waiting for security clearances. Applications opened up to the other Five Eyes nations – the US, the UK and Canada – on 1 January, and more than 500 people across the four countries have applied. The ADF recruited 185 personnel from overseas militaries through its lateral recruitment program in the last financial year. That program is for members of a foreign military who can address critical ADF skill shortages. Keogh also said the government's work to deliver the recommendations of the royal commission into defence and veterans' suicides was a factor in trying to attract people to the ADF. 'Delivering on the recommendations of the royal commission … is really important for improving people's perceptions of, and therefore also their willingness to join the Australian defence force,' he said. 'We're … conscious that we have more work to do in this area as well.' The royal commission handed down its report to the government in September, with 122 recommendations, including the establishment of a body to help defence personnel transition to civilian life and access support. The government agreed in principle to 104 recommendations and has established a taskforce to implement them.
Reuters
5 hours ago
- Reuters
China welcomes 183 Brazil coffee sellers in wake of US tariffs
SAO PAULO, Aug 3 (Reuters) - China has approved 183 new Brazilian coffee companies to export products to the Chinese market, according to a social media post of the Chinese embassy in Brazil on Saturday. The measure, a boon to local exporters after the United States government's announcement of steep tariffs on Brazilian coffee and other products, took effect on July 30. The new Chinese export permits are valid for five years, according to the post. The U.S.'s 50% tariff on some Brazilian products will begin on August 6. The levy represents a challenge for commodities traders and Brazilian coffee exporters, who need to find alternatives for the roughly 8 million bags sold to U.S. coffee processors every year. China is Brazil's top trade partner overall while the U.S. is a big buyer of Brazilian beef and orange juice, among other products. In June, Brazilian coffee exports into the U.S. totaled 440,034 60-kilo bags, 7,87 times more than Brazil's sales into China of nearly 56,000 bags that month, according to trade data compiled by industry lobby Cecafe. The Brazilian ministry of agriculture and Cecafe did not have an immediate comment. China's customs authority could not be immediately reached as it was outside the business hours. Brazil supplies about a third of the U.S. coffee demand each year, a trade valued at $4.4 billion in the 12 months ended in June.
The Herald Scotland
6 hours ago
- The Herald Scotland
Scotch whisky: 'No sign' US tariffs will increase to 25%
The US President has so far agreed a 10% tariffs on UK exports and 15% on EU ones. Across the Scotch whisky sector, there are concerns that this deal - which is believed to be costing the industry £4m a week - will lead to significant harm for businesses. READ MORE: Scotch whisky hopes rise after Trump pledges to talk tariffs Trump talks of 'great love' for Scotland during visit 'Scotland must switch whisky exports from America to Canada' The Secretary of State is currently leading a UK Government delegation to Germany this week to 'increase economic ties' with the EU. Mr Murray said it was important to point out that trade deals with the likes of EU and India, the largest growing economy in the world, will provide a 'great opportunity' for Scotch whisky. Yet, earlier on the programme, Scotland's public finance minister Ivan McKee warned that 25% tariffs could be imposed next year as a deal previously reached with America on temporary duty reliefs could be lifted. Between October 2019 and March 2021, the tariff imposed as a result of the Boeing dispute resulted in £600 million in lost Scotch whisky exports. A deal was eventually reached in 2021 to take the 25% tariff off the industry. However, Mr McKee said: 'That was done on a temporary basis and that runs out next year so it's really important that it is taken out of the picture permanently because when that was in place, that was a significant hamper to Scotch whisky exports. 'As the UK Government concludes the deal with the US Government, we would expect it to be 10% tariffs on whisky which is clearly something we wish wasn't there.' Mr McKee said he would hope this was not re-imposed but added: 'There's nothing but unpredictability when it comes to Donald Trump and tariffs so who knows what's happening.' However, Mr Murray insisted it is unlikely this would happen. Asked how likely it would be for 25% tariffs to be re-imposed on Scotch whisky, Mr Murray said: 'There is no sign of that at the moment.' He added: 'It's 10% tariffs on Scottish whisky. Yes, we would rather that was as close to zero as possible but ten percent is as low as anybody else in the world right now." Mr Murray said the Prime Minister Keir Starmer has been able to 'reset international relationships' to do a deal with the US on tariffs. He said: 'Many, including the First Minister, wanted us to walk away from the US president but it was really important in the national interest and in the Scottish national interest for us to have that relationship to do that deal. '10% is the lowest tariff in the world. We did the first trade deal it saved the steel industry, the car industry. 'Yes, 10% tariffs on Scotch whisky is disappointing and we will continue to champion the cause for the really unique position of whisky. "We don't want it to be subject to historic trade wars as it has been in the past. It is a really thriving industry.' Speaking about the US president's visit to Scotland, Mr Murray said it was a 'great privilege' to when he landed in the country last week. He said he was in 'no doubt' of Mr Trump's 'great love of Scotland', adding: 'That is something we should exploit in the national interest.' During his visit to Scotland, President Trump promised to 'take a look' at tariffs on Scotch whisky during his meeting with Starmer as he said he wanted Scotland "to thrive". Since then, however, no changes have been made to the current arrangement. Speaking on the radio today, the Secretary of State also said Mr Trump suggested he should join him at the press conference beside Air Force One when he arrived in the country, however, the Secretary of State declined. Mr Murray said: 'He did tap me on the shoulder and said, 'let's go and do this press conference together' which I declined…because it's not for me to do so. 'I don't think it was for me to speak to the American press pack who is travelling on Air Force One with the President of the United States.'
