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Northeast Asian Crude Demand Tumbles, Outlook Bleak

Copyright © 2021 Energy Intelligence Group

• In May, the combined crude imports by China, South Korea and Japan tumbled by nearly 4% on the month to 14.72 million barrels per day. • Demand for crude in South Korea and Japan were impacted by low refining runs. • The outlook looks dismal going forward, with China's July imports looking likely to plunge by more than 2 million b/d year on year. The demand side of the global oil balance has sustained a significant blow as crude oil imports plunged in three of the world’s biggest importers. Combined imports by China, South Korea and Japan tumbled by 577,000 b/d from April to May, according to data from Chinese customs, Japan’s Ministry of Economy, Trade and Industry, and Korea National Oil Corp. (KNOC). The decline is even more dramatic compared to last May, as imports have plunged by 1.45 million barrels. The outlook is devoid of a silver lining. Chinese imports plummeted by 3.18 million b/d from a year ago to 9.81 million b/d in June, while July imports appear likely to drop by more than 2 million b/d year on year. Chinese demand remains weak. Appetite from its independent refiners is slumping and demand from its national oil companies (NOCs) under is threat from the government’s plan to release up to 29 million bbl of crude from the strategic petroleum reserve. Since China accounts for two-thirds of total Northeast Asian crude imports, its future impact on overall demand from the three buyers is considerable. China Offsets Tumble Elsewhere

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