In-transit crude to China tumbles to 3-year low on subdued buying – Vortexa

London (Quantum Commodity Intelligence) – In-transit crude shipments to China have dipped to a three-year low of 35.5 million metric tons per day so far in June, as a combination of market factors and policy changes keep Chinese refiners' crude purchases subdued, according to tracking data from analytics firm Vortexa.

"Rising crude prices, high stockpiles and weak product export margins have snuffed out the once voracious import appetite of Chinese refiners," said Vortexa in a report published Tuesday.

This puts the average volume of crude heading to China at any given point during June at around 260 million barrels.

At any given time, around 1 billion barrels of crude in total are on the water.

The Vortexa report contrasted current shipments against the same period in 2020, when close to 64.6 million mt/day of crude were in-transit to China, driven by Chinese refiners' thirst for discounted crudes amidst a robust post-covid recovery.

The report said that Brazilian crudes have seen the sharpest year-on-year decline on in-transit volumes to China, followed by the US.

The slowdown in China's crude imports has also taken a toll on VLCC utilization, noted Vortexa.

Presently, around 120 crude-laden VLCCs are en-route to China, down from over 200 last June.

"This lacklustre tonnage demand continues to keep VLCC freight rates in the doldrums," said the report, noting VLCC Middle East-Far East tanker rates have averaged $6.45/mt so far this month, significantly below the 5-year average of $10.43/mt, referencing Argus freight assessments.