Oil imports in China have dropped in March, according to a Reuters poll on Monday. Analysts expect China’s economic contraction in the first quarter of 2020 due to the Coronavirus outbreak.
China is the world’s top oil importer and a critical driver of oil demand growth. The country went into lockdown at the end of January to stop the spread of the deadly virus. Consequently, the demand for energy for industrial activity and fuel sharply dropped.
In the first two months of the year, oil imports in China had been restrained. Two weeks before the first announcement of the Coronavirus outbreak, China decreased volumes of oil. Usually, Chinese refiners stocked up on crude before the Chinese Lunar New Year. It was celebrated at the end of January this year.
Reuters reviews China
According to Reuters calculations, China’s crude oil imports climbed by 5.2%.
In March and early April, the country could build its crude oil reserves, since the oil has been cheapest in years. Still, because of the limited storage capacity, storage would be lower than in previous years, Wood Mackenzie, a research and consultancy group of energy, renewables, and metals, said last month.
According to the Reuters survey, oil imports must have been contracted in March, since the outbreak caused limited demand from overseas amid lockdowns in other significant economies.
Oil imports are just a part of the country’s economy and trade. Economists polled by Reuters claim that China’s first-quarter GDP contracted sharply. It has happened for the first time since 1992, nearly 30 years.
Referring to the Chinese economy, Tao Wang, an economist at UBS, noted that in March, economic activity improved in China. Despite the fact, GDP growth in the first quarter of 2020 is likely to contract by 10% from the previous year.
While China resumed its economy and reopened its cities, the rest of the world started to lockdown in an attempt to flatten the curve of the Coronavirus cases.