China passes Japan as No. 2 crude importer in May

TOKYO, June 25 - China overtook Japan as the world's second-largest crude oil importer in May, according to data on Friday that showed an 8 percent rise in purchases by Japan, where power plants have been forced to burn more crude.

Japan's customs-cleared crude oil imports in May rose 8.0 percent to 18.525 million kilolitres (3.76 million barrels per day) from a year earlier, preliminary data of Japan's Ministry of Finance showed on Wednesday.

China, which surpassed Japan as the world's No. 2 oil consumer in 2003, imported 16,198,188 tonnes (118.25 million barrels, or 3.81 million bpd) of crude in May, up 25 percent from a year ago, customs data showed on Monday. [ID:nPEK328405]

"It's a symbol of the era," said Akira Kamiyama, derivatives trader at Mitsui & Co. "Japan's imports will be capped, but China's imports will grow fast, with no end in sight."

The increase in Japanese imports comes amid the prolonged shutdown of the world's biggest nuclear power plant, operated by Tokyo Electric Power Co <9501.t> (TEPCO), after a major earthquake last July. The shutdown doubled TEPCO's demand for direct-burning crude and fuel oil for thermal generation.

But overall, Japan's domestic oil sales have been shrinking at around 4 percent a year since 2006, and the government expects the slide to continue as record high prices spur industries to shift to electricity or alternative power sources.

China's imports are growing quickly as double-digit economic growth and low, state-set domestic fuel prices drive demand in the world's most populous nation.

Analysts expect China's crude imports to get support from this month onward after Beijing's surprise decision to raise gasoline and diesel prices by nearly a fifth last week revived refining margins, encouraging them to step up production.

China's announcement this month that it would speed up building commercial oil reserves to cope with turbulence in the oil market also helps support China's imports, Kamiyama added.

For the first five months of 2008, however, Japan held a comfortable lead over China. Both still lag far behind the United States, which imports some 10 million bpd of crude.

China's crude imports in the year through May are up 12.7 percent at 75,967,509 tonnes (3.65 million bpd), while Japan's imports rose 7 percent to 104.377 million kl (4.32 million bpd) in January-May, according to Reuters calculations.

The Middle East suppliers boosted crude exports to Japan by 5 percent in May to 16.393 million kl, the data showed. Saudi Arabia, the top oil exporter to Japan, has boosted its crude supplies to Japan to full contracted volumes since last November.

The value of May's crude imports increased 53.4 percent to 1.303 trillion yen ($12.09 billion) from a year earlier, following a 55.0 percent annual rise in April as prices soar.

While Japanese refiners are suffering from low domestic margins and falling demand, crude imports may not fall much further as many plants are reorienting themselves toward the export market, hoping to take advantage of Chinese demand.

The value of Japan's mineral fuel exports to China more than tripled to more than 70 billion yen in May from a year ago, helped by China's robust thirst for Japan's high-quality low-sulphur diesel used by trucks, ministry officials said.

(Reuters)