China's February crude oil imports are on track to fall to their lowest level in four months, preliminary data from Thomson Reuters Oil Analytics show, as Beijing's attempt to restrict polluting industries weighs on demand.
The world's second-largest economy imported 22.56 million metric tons of crude so far this month, according to Reuters Analytics. That's the lowest level of shipments since official Chinese customs figures in October showed a drop to 20.41 million metric tons. Reuters Analytics will provide a final reading on Monday.
China may buy less crude oil as Beijing strives to maximize energy efficiency, clamps down on polluting industry and shelves new refining capacity in some provinces.
"The Chinese government will continue to prioritize reform over more rapid economic growth in 2014, with energy and environment reforms at the forefront of policymaking," wrote Michal Meidan, senior analyst for Asia at political risk consultancy Eurasia Group.
"In 2014, Beijing will target the main sources of air pollution, specifically oil-intensive industries such as manufacturing and construction," he wrote in a February 24 report. "The net effect of these policy shifts will likely be a gradual decline in oil intensity."
Distortions
Analysts said they needed to pick through the March numbers to determine whether this month's crude oil import decline signaled meaningful economic stress or just the effect of seasonality.
February's China crude imports numbers are down almost 16 percent from Reuters Analytics' January estimate of 26.94 million metric tons, and well below official assessments from China's customs data which reported a record 28.15 million metric tons last month.
Many cautioned about reading too deeply into the softer crude import figures, saying February provided a shorter-than-usual data snapshot.
Moreover, this month's numbers may be distorted by a seasonal lull in activity owing to the Lunar New Year festival, which began on January 31 and covered early February.
"It would be a negative surprise and can be only partly explained by the Chinese New Year celebrations," said Eugen Weinberg, head of commodity research at Commerzbank, when asked to comment on the Reuters Analytics data.
Meanwhile, Credit Suisse commodity strategists pointed in a research report Thursday to mounting evidence that the seasonal pick-up after the lunar holidays in China "has been slower than in 2013" but added that "reading too much into January and February data is always risky."