China’s lower crude imports helped ease Asian refinery feedstock tightness

China’s sharp decline in crude imports has unintentionally eased feedstock tightness across Asia, helping refinery runs outside China perform better than previously expected despite ongoing Strait of Hormuz disruptions. Additional availability of Middle Eastern, Russian, West African, and Atlantic Basin barrels supported stronger crude imports into countries such as South Korea, Singapore, Thailand, and India, partially offsetting tighter Gulf flows and preventing a deeper regional supply crunch.

Chinese crude imports in May month-to-date are tracking around 6.6 mbd, the lowest level since 2016. Compared with last year’s average, imports from Russia, Africa, and parts of the Americas have declined materially, effectively freeing additional barrels into the broader Asian market. While weaker Chinese refinery activity and softer product exports have pressured domestic operations, the reduction in crude intake has simultaneously improved crude availability for the rest of Asia.

Asian countries' crude imports (kbd)

Source: Kpler

Note: Data as of 25th May

As a result, refiners across South Korea, Japan, Southeast Asia, and India have been able to secure more crude supply than initially expected, allowing refinery throughput to hold up materially better than earlier base-case assumptions despite tighter Middle Eastern flows and Strait of Hormuz disruptions.  This has helped Asia (ex-China) refinery runs recover more strongly than initially expected in May, although overall refining activity remains heavily disrupted versus normal conditions. Asia (ex-China) refinery runs are now expected around 14.8 mbd, up roughly 900 kbd m/m, although still around 1.3 mbd below last year’s levels. Looking ahead, a similar rate is expected in June, with Asian (ex-China) runs at around 14.8-15.0 mbd.

Asian refinery runs (kbd)

Source: Kpler

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