China has released its key economic data for February 2017, including its export-import data, auto sales data, and manufacturing index. This information is crucial for assessing the outlook of the crude oil tanker industry.
As you can see in the above graph, crude oil tanker stocks rose in 2015. The crude tanker industry boomed that year, largely due to higher crude oil imports by China as it took advantage of lower crude oil (USO) prices and filled its strategic petroleum reserves.
China, the second-largest economy in the world, is a key factor in the crude oil tanker industry. Along with the United States, China is one of the world’s largest importers of crude oil. The United States doesn’t import the majority of its crude oil by sea, and China does. So China’s imports are more important to the crude oil tanker industry.
China’s imports also greatly influence tanker rates, which impact companies such as Frontline (FRO), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP), Nordic American Tankers (NAT), DHT Holdings (DHT), Gener8 Maritime (GNRT), Navios Maritime Midstream Partners (NAP), and Euronav (EURN).
China (FXI) (MCHI) is a global manufacturing hub and the largest manufacturing economy in the world. Its oil demand is closely related to its manufacturing activities. Higher manufacturing activity translates to higher demand for oil, and higher demand for oil means higher tanker demand.
In this series, we’ll take a close look at China’s December 2016 data and the performance of its manufacturing sector. We’ll also see how China’s auto industry performed in December since the country’s oil demand is closely related to its gasoline usage. Over the years, China’s auto industry has risen to become the largest in the world. So China is the most important country for the crude oil tanker industry.
In the next part of this series, we’ll take a closer look at China’s import-export data.