Inflows of Russian crude to China slumped 23.5% in April to 1.74 million b/d (7.12 million mt) from the record levels in March, General Administration of Customs data showed May 20, as more cargoes from the OPEC+ supplier were drawn to India.
Seaborne Russian ESPO Blend crude, a longstanding favorite among China's private refiners, is starting to attract buyers in India, with talk of multiple import deals being sealed by both Indian private and state-run refiners already lifting premiums for the grade.
Of the 35 April-loading cargoes, 26 were destined for China while seven were directly fixed to India. Of the April-loading shipments to China, 19 were discharged in April, bringing total ESPO deliveries into China to 24 Aframax-sized cargoes during the month, S&P Global Commodity Insights reported.
In comparison, 33 Aframax-sized cargoes were discharged in March, and 30 in February.
Looking forward, China's crude imports from Russia are likely to rebound as Russia increased ESPO supplies to 39 Aframax-sized cargoes in May, with China taking 29 and India 10, according to shipping data from Kpler and Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights May 22. Market sources said state-owned Unipec doubled its April ESPO procurement to eight cargoes for May delivery.
Kpler expects China's seaborne crude imports from Russia to rebound 18% from April. China imports Russian crude via both seaborne and pipeline.
Russian crude imports by China and India are however increasingly in the spotlight. G7 leaders agreed May 19 to step up measures to counter any potential evasion of price caps on Russian oil exports, as well as the ability of Russian banks to sidestep financial sanctions through foreign subsidiaries.
Meanwhile a Russia-China Business Forum scheduled for May 23 in Shanghai is expected to strengthen bilateral trade between the two countries.
Saudi Arab tops crude suppliers
In April, the decline in Russian crude inflows from the record high of 2.27 million b/d in March was within market expectations and remained 8.7% higher than the level saw in a year ago, but deeper than the 16.2% decline in China's total crude imports, leading Russia to lose its top supplier spot to Saudi Arabia in the month.
The cost of the Russian crude imports averaged $70.96/b, $1.34/b lower than $72.3/b in March, GAC data showed. Cargoes from Saudi Arabia averaged $83.88/b in April, rising from $82.22/b in March.
Saudi Arabia delivered 2.07 million b/d (8.46 million mt) of crude to China in April, down 5.3% year on year and down 1.8% from March on a barrels-per-day basis.
Volume are unlikely to rise significantly in May and June as China lowered term nominations due to higher OSPs compared to softening spot market prices and with refining margins still weaker. Chinese refiners are now expected to cover the shortfall from the spot market, including arbitrage barrels from Latin America and West Africa, sources said.
In May and June, more cargoes loaded from the US Gulf Coast are being delivered into China. Crude grades being directed from the USGC region include light sweet WTI Midland, medium sours Mars and Southern Green Canyon, and Cold Lake Blend from the Canadian oil sands sent via pipeline to USGC, according to Chinese buyers, shipping fixtures and Kpler.
GAC data showed that China's crude imports from the US jumped 25.8% year on year and 3% from March to 941,340 mt in April. Canadian heavy crudes also surged 24.8% on the year and 26% month on month to 602,796 mt.
For the January-April period, Russia remained the top crude supplier, delivering 26.5% more crude at 1.98 million b/d (32.4 million mt) than in the same period of last year.
Crude shipments from Europe rose 5.5% year on year to 2.17 million b/d in the four-month period and from North America they gained 11.6% to 309,000 b/d, while from the Middle East they fell 2.1% to 5.51 million b/d, GAC data showed.
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