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Crude Tanker Stocks and ETFs: The Current Outlook

PART:
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Part 5
Crude Tanker Stocks and ETFs: The Current Outlook PART 5 OF 8

What China’s Fall in Crude Imports Means for Crude Tankers

China’s crude oil imports

Crude oil imports from China fell 1.7% in August to 33.98 MMbpd (million barrels per day) from 34.6 MMbpd in the previous month. August imports were their lowest in the last eight months. Compared to the same period last year, crude imports were 3.4% higher. On a daily basis, China imported 8 MMbpd (million barrels per day)—compared to 8.18 MMbpd in July.

What China&#8217;s Fall in Crude Imports Means for Crude Tankers

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China’s crude imports

China (FXI) imports most of its crude oil using crude oil tankers. Typically, higher crude oil imports mean higher crude oil tanker demand. Higher crude tanker demand translates to higher rates for tankers.

Higher tanker rates benefit crude tanker companies including DHT Holdings (DHT),  Teekay Tankers (TNK), Frontline (FRO), Tsakos Energy Navigation (TNP), Nordic American Tankers (NAT), Navios Maritime Midstream Partners (NAP), Gener8 Maritime (GNRT), and Euronav (EURN).

Russia’s dominance

For a long time, China’s top supplier of crude oil was Saudi Arabia. However, for the past six months, Russia has taken this spot. In August, China’s crude oil imports from Russia were 4.426 million metric tons or 1.04 million barrels per day. In the first eight months of 2017, Russia’s volume rose 13% year-over-year to 38.65 million metric tons or 1.6 million bpd.

Crude oil supplies from Saudi Arabia fell 16.2% in August year-over-year to 3.657 million or 861,200 bpd. Now Saudi Arabia is in third place as China’s oil supplier behind Russia and Angola. In the first eight months of the year, crude oil from Saudi Arabia to China fell 1.7% year-over-year.

This trend of higher Russian crude imports in China is expected to continue. The distance from Russia to China is almost double the distance from Saudi Arabia to China. A longer route increases ton-mile demand, which benefits the tanker industry.

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