China to reduce U.S. oil imports post-September amid
trade spat: sources
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[June 21, 2018]
By Florence Tan and Chen Aizhu
SINGAPORE/BEIJING (Reuters) - Chinese oil
buyers will keep taking crude from the United States 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.
Beijing has put U.S. energy products, including crude oil and refined
products, on lists of goods that it will hit with import taxes in
retaliation for similar moves by Washington.
Beijing 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, trading arm of Sinopec - Asia's largest refiner and biggest
buyer of U.S. oil - has been offering U.S. crude, such as West Texas
Intermediate (WTI) 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 the state refiner will
maintain its usual import volumes for July-loadings, but can't commit to
bookings further out.
"Future purchases (from August-loading onwards) 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.
Unipec said early this year that the company expects to trade up to
300,000 barrels per day (bpd) of U.S. crude oil by the end of the year,
about triple the trading volume last year.
That will be worth roughly $7.7 billion over the whole year based on $70
per barrel of oil.
"If the tariff is a long-term problem, the U.S. is going to struggle to
find a market as big as China," Joe Willis, senior research analyst at
Wood Mackenzie said at a Thomson Reuters industry seminar on Thursday.
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Oil tankers Qi Lin Zuo of China and Sti-Matador (L) stand attached
to mooring stations near a refinery in Bayonne, New Jersey, U.S.,
August 24, 2011. REUTERS/Lucas Jackson/File Photo

"I don't see a major impact on our purchasing program. Cargoes for July loadings
are unlikely be affected," said a planning executive with a Sinopec plant that
buys 1 million to 2 million barrels of U.S. oil every month.
His plant this week nominated internally with Unipec for an August loading plan
that is expected to be finalised a month later, said the planning executive.
For graphic on U.S. crude oil exports to China click https://reut.rs/2JXqcaa
UNCERTAINTY
China shipped in 3.89 million tonnes, or about 315,500 bpd of U.S. 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 Chinese customs. The
grades include WTI, Mars and Southern Green Canyon.
Nevertheless, uncertainty over the timing of the tariff and the outcome of
U.S.-China trade talks has kept some buyers from booking further ahead. Chinese
refineries typically order U.S. oil three months in advance due to shipping
distances.
"We don't even know whether it will eventually be carried out. What if the U.S.
and China compromise and things change overnight?" said a third source, who
deals U.S. oil with an independent refiner, adding that his company will stop
booking U.S. crude for September deliveries into China.
Sinopec refinery sources said finding alternative supplies won't be an issue as
U.S. 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.
(Reporting by Florence Tan in SINGAPORE and Chen Aizhu in BEIJING; Additional
reporting by Ron Buosso in LONDON; Editing by Tom Hogue)
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