23-07-04 China’s crude oil imports hit a record of about 2.8 mm bpd in June, prompting speculation that aside from a boom in demand, Beijing may be quietly building inventories. Latest data from Chinese customs showed that in June China imported 11.27 mm tons, or 2.82 mm bpd of crude, 47 % above June 2003, despite government measures to slow activity to put the brakes on the economy.
The monthly record brought imports in the first half of 2004 to 61.02 mm tons, or 2.51 mm bpd, 39 % above January-June 2003. The data shows crude import growth in the year to the end of June continued to accelerate, from growth of 37.6 % in the year to end-May, when imports averaged 2.46 mm bpd.

Rocketing fuel imports this year have been driven by a sharp upturn in demand to fuel China’s economic growth and a worsening national power crunch. Analysts project oil demand in the second biggest consumer after the United States will rise by anywhere from 500,000-800,000 bpd this year to over 6 mm bpd. But some analysts say China has also been putting barrels into inventory, worried by its increasing dependency on imported oil.
"The country’s two state oil firms may be keeping a higher level of commercial stocks than before the Iraqi war in March last year, possibly under a state mandate to boost (oil) security," said Kang Wu from the Hawaii-based East-West Centre.

Beijing has started work on storage on the eastern seaboard, which will make up the first phase of a national strategic stockpile of about 100 mm barrels of crude. The tanks are due to be ready by the end of 2005.
But top refiner, Sinopec, has already opened commercial storage of about 2.5 mm cm, or 15.7 mm barrels, in eastern China earlier this year. The depots are linked to a new crude pipeline with a capacity to transport 20 mm tons, 150 mm barrels, a year.
"The tanks are being fully used," said a Sinopec official.