Singapore (Platts)--8Feb2013/520 am EST/1020 GMT

China imported 25.15 million mt of crude oil or an average 5.95 million b/d in January, an increase of 7.4% year on year, according to preliminary trade data released Friday by the General Administration of Customs.

This is also 6.3% higher than the 5.6 million b/d of crude imports in December 2012 and is the third highest volume on record after the 6.02 million b/d seen in May 2012 and February 2012's 5.98 million b/d.

The growth rate last month was similar to January 2012, when crude imports also rose 7.4% year on year to 5.54 million b/d.

The average value of crude imports in January was $792.90/mt, according to the data, edging down from the average $795.53/mt seen in January 2012.

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Chinese refiners had been expected to import more crude oil from November last year due to winter demand as well as in preparation for peak consumption during the Lunar New Year holidays which starts February 10.

State companies Sinopec and PetroChina both said earlier this month they have been stockpiling oil products since December to ensure sufficient domestic supply during the holiday.

Barclays' commodities analyst Sijin Cheng said in a note Friday: "Strong [crude] imports in the past several months have reflected more the strength in underlying demand as new refineries come online and China's economic growth picks up. The upcoming holiday may have also prompted refiners to build stocks."

Crude oil exports in January fell 9.7% year on year to 280,000 mt, although this was still the highest monthly level since February last year, when exports were 430,000 mt.

This brought China's net crude oil imports in January to 24.87 million mt (5.88 million b/d), an increase of 7.7% year on year and 5.4% month on month.

In a report on China's oil demand published Thursday, Barclays said oil demand in China in the fourth quarter of last year rebounded following a more sluggish Q3. "Seasonal stock building, the concentration of new [refinery] capacity additions and an unusually cold winter likely helped push up refinery runs," it said.

However, because industrial activity will be muted in the first quarter of this year because of the Lunar New Year holiday, "real oil demand may hit a soft patch before picking up again in Q2", Barclays added.

Over the longer term, this year could see the government granting more licenses to independent teapot refiners for crude imports, which could lead to "a strong call for crude oil over traditional fuel oil imports", Barclays said. This follows the government granting ChemChina, one of the largest independents, a 10 million mt/year crude import quota last year.

China's eastern Shandong province has the highest concentration of teapot refineries -- small independent plants that have typically less than 5 million mt/year (100,000 b/d) capacity and limited secondary processing units.

These refiners largely use imported fuel oil as feedstock because they do not hold crude import licenses and domestic crude and fuel oil supplies are limited.

Turning to oil products, imports in January surged 32.5% year on year to 3.91 million mt but were down 6% month on month.

Meanwhile, oil product exports rose 30.6% year on year to 2.43 million mt in January, bringing net product imports to 1.48 million mt, up 35.8% year on year.

China's production data for January and February, including refinery throughput, is expected to be released March 9 by the National Bureau of Statistics.

--Song Yen Ling, yen_ling_song@platts.com
--Edited by Irene Tang, irene_tang@platts.com

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