China said it more than doubled the size of its strategic crude oil reserves between November 2014 and the middle of this year, building inventories at a rate exceeding analysts’ estimates of the country’s stockbuilding.
The world’s largest energy consumer increased its reserves to 26.1 million tonnes, or about 190.5 million barrels, by mid-2015, the National Bureau of Statistics said on Friday. The increase occurred as the country took advantage of steep declines in oil prices to stockpile crude.
Analysts have closely watched China’s stockpiling efforts to better gauge how much of the country’s oil imports are going into the reserves and how much is actually being refined and consumed.
China intends to build crude reserves of 550 million barrels by 2020. The 190.5 million barrels is equivalent to about one month of Chinese net crude imports.
The government made its first announcement on the size of its strategic reserves in November 2014, putting them at 91 million barrels. (Full Story)
The latest figures, which include reserves stored at eight government reserve bases and some commercial tanks, show an increase of roughly 100 million barrels, far more than the 30-40 million estimated by most analysts.
“The numbers are in line with our estimates, but due to the lag in reporting last year, the stockbuild was not as strong as the numbers show,” said Barclays analyst Zhang Chi, adding that last year’s announcement may have underreported the total amount in reserve since it didn’t count some facilities that had begun stockpiling around 2012.
The country generated an implied excess of 109 million barrels between January and July, Reuters calculations using production, import and refinery throughput data show – an amount that would be available to store in its growing stockpiles.
China is expected to add 70-90 million barrels to its strategic crude oil purchases next year, offering some support to battered markets for the commodity.
The reserves are being stored in seven above-ground facilities at Zhoushan, Zhenhai, Dalian, Huangdao, Dushanzi, Lanzhou and Tianjin, as well as one underground facility at Huangdao, with a total capacity of 28.6 million cubic metres (about 180 million barrels), the statistics bureau said.
In addition to the national reserve bases, industry sources have told Reuters that the government has also rented storage tanks from private firms to build the stocks.
Friday’s announcement, the second time the Chinese have released data on the stockpiles, means the government may make it an annual reporting, analysts said.
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