Chinese oil buyers to reduce US imports post-Sept

Energy products on lists of American goods to be hit with counter-tariffs

Chinese oil buyers will keep taking crude from the US through September, but plan to reduce future purchases to avoid a likely import tariff amid a trade spat between the world’s two largest economies, multiple industry sources said.

China has put US energy products, including crude oil and refined products, on lists of goods that it will hit with import taxes in retaliation to similar moves by the Trump administration.

The Chinese government did not specify when it will impose a 25 percent tax on oil, and that gives buyers time to adjust purchases while waiting for the outcome of trade talks, the sources said.

Unipec, the trading arm of Sinopec – Asia’s largest refiner and biggest buyer of US oil – has been offering US crude, such as West Texas Intermediate Midland, to other Asian buyers for July, said three sources with knowledge of the offers.

“They [Unipec] only offer crude for September arrival, that means July-loading cargoes,” one of the sources said, although adding that the offer was “quite expensive.”

Unipec officials said this was normal trading activity, as the trading unit often re-sells excess crude from its refining system depending on economics and the state of its supplies.

A top trading executive with Sinopec told Reuters that the State refiner will maintain its usual import volumes for July-loadings, but can’t commit to bookings further on.

“Future purchases [ from August-loading onward] will depend on developments,” said the executive, who asked not to be named due to the sensitivity of the subject.

A Sinopec spokesman declined to comment.

“If the tariff is a long-term problem, the US is going to struggle to find a market as big as China,” said Joe Willis, senior research analyst at Wood Mackenzie.

China shipped in 3.89 million tons, or about 315,500 barrels per day of US crude in the first quarter of this year, nearly eight times the amount a year earlier and 3.5 percent of China’s top crude oil imports, according to data from Chinese customs.

“I don’t see a major impact on our purchasing program. Cargoes for July loadings are unlikely to be affected,” said a planning executive with a Sinopec plant that buys 1 million to 2 million barrels of US oil every month.

Still, Sinopec refinery sources said that finding alternative supplies won’t be an issue as US oil is relatively new to the Chinese market, and can be replaced by North Sea grades like Forties, Middle Eastern supplies or Russia’s Urals crude.