China's strategic crude oil stockpiling slowed in the first half of 2016 because of delays in facility construction and as existing sites were filled, resulting in more imports flowing to the country's independent refineries, analysts said.
The competition highlights the increasing buying power of the independent plants, known as teapots. The slowdown in Chinese stockpiling likely limited Chinese crude demand in the first half of the year but that may change as new Strategic Petroleum Reserve (SPR) sites come online later in 2016 and early 2017.
Beijing-based consultancy SIA Energy estimates that the government's stockpile reached 35.6 million tonnes, or 260 million barrels by the end of July, an average fill rate of 180,000 barrels per day (bpd). That's down 25 percent from government data for the second half of 2015.
Several factors, including delays in new tankages and the difficult engineering required for underground caverns, contributed to the slowdown. But there was also competition from the teapots that have outpaced SPR buying.
"The role for SPR has been eclipsed by teapots for this year's crude oil imports. Teapots (have) become a much larger factor," said Sengyick Tee, senior director of oil research with Beijing-based consultancy SIA Energy.
Thomson Reuters Supply Chain & Commodities Research estimates the fill rate was even slower, at 130,000 bpd in the first eight months of 2016.
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