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China Feb crude imports rise 8 pct, no holiday dent

BEIJING - China’s imports of crude oil climbed 8.3 percent in February from a year earlier to a high 3.15 million barrels per day, data showed on Monday, firm growth for a month when the Lunar New Year can tend to slow demand.

In the first two months of the year, the world’s number two oil consumer took shipment of 25.79 million tonnes, up 5.7 percent year-on-year, preliminary figures on the official Customs Web site showed (www.customs.gov.cn).

Much of the country shuts down for the start of the Lunar New Year, which this year fell in mid-February, and up to two weeks of festivities following, when Chinese workers traditionally return home to spend time with their families.

Importers try to avoid scheduling cargoes to arrive during the holiday, and in January had pushed shipments up to a near-record 3.22 million bpd as they took advantage of low global prices to build up stocks ahead of the holiday.

But buying for the country’s strategic petroleum reserve, which only began late last summer, is also supporting growth in imports, which rose a rapid 14.4 percent in 2006, and may account for the strong holiday season figure.

‘Crude imports are sticking at a high level,’ said analyst Gordon Kwan at CLSA in Hong Kong, who expects growth of around 8 to 12 percent over the year.

‘In February we have the Chinese New Year period and normally a lot of factories would shut for the holiday, so consumption should not be as high as last February when they didn’t have this,’ he added. Last year the festival began in late January.

A sharp fall in net imports of oil products in February, down by over half from January levels, also suggested dampened consumption, even though the millions of cross-country treks home for the festival normally boost demand for transport fuels.

However, a mid-January cut in state-set gasoline prices may have encouraged exports, which more than doubled.

Price is right?

Beijing has been secretive about where it is getting oil from and how fast the strategic reserve tanks are filling, but Kwan said Beijing preferred to buy when prices were under $60 a barrel -- a level they stayed below for over half of February trading days.

On Monday, US crude oil futures again slipped under $60 per barrel on forecasts of warmer weather in top consumer the United States and concern about excess supply.

Industry sources told Reuters in January that tanks at the first strategic reserve site in Ningbo, in Zhejiang province, were about two-thirds full. Analysts and traders had thought it was the only one of four that was functioning.

But the official Xinhua news agency reported last week that a second storage facility was also ‘operating’, and that filling at a third could start by mid-year, raising the prospect of a faster stockbuild and stronger draw on world markets.

China exported no crude oil in February, a rare occurrence for a country that supplies North Korea and countries ranging from Singapore to the United States, but matching a similar break in shipments in February 2006.