The highest U.S. crude oil exports to China in 11 months lifted total seaborne U.S. crude oil exports to a record high at 11.9 million tonnes in June 2019, according to shipping association BIMCO.
Also contributing to the June record was South Korea, as exports to the other main Far Eastern buyer reached an all-time high volume of 2.3 million tonnes.
Between June 1 and June 30, 1.2 million tonnes were shipped to China, up from 1 million tonnes in May and worlds apart from no exports at all in the months of August through October in 2018 and again in January 2019.
“From being a very consistent and significant buyer of U.S. crude oil until the trade war changed it all, China was back above a million tonnes in June 2019,” Peter Sand, BIMCO’s Chief Shipping Analyst, said.
“As China stopped buying in August 2018, South Korea became the number 1 destination for U.S. seaborne crude oil, taking 1.5 million tonnes on average per month in 2019, and setting a record of 2.3 million tonnes in June 2019.
“From a shipping perspective, long-haul exports to Asia are great. As China retreated last year, India, Taiwan, Japan and Singapore stepped up alongside South Korea to keep the very long sailing distances around. Tonne mile demand was also record high in June.”
South Korea took over as main destination
Taking 2.3 million tonnes of crude oil from the U.S. in June, meant that South Korea was the main destination, buying 19% of total seaborne U.S. crude oil exports in that month, BIMCO noted.
Even though it isn’t crude oil of the same characteristics, the growth in South Korean imports from the U.S. comes at a time when it’s been cutting its imports from Iran significantly. South Korean imports from Iran are down from 1.2 million tonnes in March to zero in May and June, the shipping association cited official statistics.
The same goes for India, which imported an average of 1.3 million tonnes in March through June from the U.S., while cutting its Iranian imports sharply from 1.4 million tonnes in March and April to zero in June. India used to be Iran’s second largest buyer of crude oil after China.
“Despite growing tonne mile demand, crude oil tanker earnings have generally been lossmaking so far in 2019,” Sand explained.