Crude tonne-miles: SE Asia & India pick up the slack where China left off
Authors Arthur Richier
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China’s contribution to crude tonne-miles has dwindled year-to-date according to Vortexa freight data as the country hits the breaks on crude buying. Other nations have stepped in to fill the void as our data shows.
Our data shows crude tonne-miles with China as a destination have reached their lowest levels in 2021 of 50bn tonne-miles for the second time in Week 31, after reaching that level in Week 27. China’s pragmatic approach to buying crude has seen it decrease imports following a rise in crude prices in recent months, coupled with government intervention on the operations of independent refiners.
Year-to-date 60% of all crude tonne-miles possess China as a destination, making it the world’s dominant player. Though its importance in dirty freight markets cannot be underestimated, neighbouring economies such as the Southeast Asian region and India have stepped in to fill the void left by decreasing Chinese crude imports.
Southeast Asia and India’s combined crude tonne-miles reached a 6-months high of 36 bn tonne-miles during Week 31 of 2021, which coincides with a new low reaching in the steady decrease of Chinese crude imports. As Asia’s demand for refined products remaining strong in spite of various Covid-19 waves, refiners have stepped in to capture some of the crude flows that would otherwise have found a home in China.
Looking ahead, rising crude flows to India and Southeast Asia, especially from the Middle East Gulf, could benefit particularly the Suezmax tanker segment. This would provide much needed respite in a market that seems to be stuck in the doldrums. However, the biggest loser of decreasing Chinese crude imports has been without a doubt the VLCC tanker segment and these vessels could seek to encroach on the Suezmax market, throwing their hat in the ring for a cargo, thus keeping a lid on any improvement in freight rates.