Home Asian News The risk of Chinese transit was witnessed after the Suez Canal jam...

The risk of Chinese transit was witnessed after the Suez Canal jam – Radio Free Asia

The six-day blockade of the Suez Canal ended last month with no major damage to the stranded ship or the Chinese economy, but the shutdown could be a warning. on increasing energy security risks.

As the world’s largest oil exporter and importer, China is susceptible to transit interruptions at congestion points on its key trade routes.

The launch of the giant 200,000-ton container ship Ever Given on March 23 made almost no scratch in China’s trade and economic growth in the first quarter.

The General Department of Customs (GAC) and news agencies reported that exports in March rose 30.6% and imports rose 38.1% from a year earlier in dollar terms.

Strong trade figures paved the way for economic growth in the first quarter to reach 18.3 percent year-on-year during a plunging pandemic, the National Bureau of Statistics said.

Chinese officials deny the impact of the crash is largely an inconvenience. The ship was liberated and re-commissioned on 29 March.

“Although the congestion incident … affected shipments of some Chinese enterprises and caused fluctuations to a certain extent in the relevant rates, but its impact on operations. China’s foreign trade is sudden, short-term and limited, “Commerce Department spokesman Gao Feng told state media.

The Ever Given vessel, loaded with more than 18,000 containers, called at China’s Qingdao, Shanghai, Ningbo and Yantian ports before departing from Tanjung Pelepas in Malaysia en route to Rotterdam in the Netherlands, American Shipper and Caixin Global said.

But Egypt’s Suez Canal Authority detained the ship on April 12 awaiting payment of US $ 916 million (5.9 billion yuan) of salvage and other requests, making it work. delivery of US $ 3.5 billion (22.8 billion yuan) on suspicion, Caixin and the Press Link reported.

More than 80% of the goods are Chinese goods, Caixin reports, citing YunQuNa logistics.

The Panama-flagged vessel is operated by Taiwan’s Evergreen Marine Corp but is owned by Shoei Kisen Kaisha Ltd. Japanese. 26 crew members from India were arrested along with the ship on board.

Concern is growing for the welfare of trapped sailors.

“It is still unclear when exactly the ship’s crew will be allowed to disembark,” Timesnownews.com said.

According to separate accounts, 350-400 ships were left waiting on either side of the congested area at the time of the accident, forcing some to head south around Africa and Cape of Hope, adding more a week on their schedule.

Long way

Although the delay is relatively short, it highlights the costs and complexity of global shipping, supply chain and energy flows.

Anoop Singh, head of tanker analysis at Braemar ACM in Singapore, said the longer route around Africa has increased by $ 450,000 (2.9 million yuan) per trip.

During the downturn, charter costs for some tankers from the Middle East to Asia rose 47% in three days, Singh said.

Analysts at international consulting firm Wood Mackenzie said the backup incident in Suez caused by a 400 meter (1,312 foot) cargo ship created major energy problems for importing some products. Asian petroleum products and exports of medium distillates include diesel and jet fuel.

Analysts said the impact of the general cargo delay could be felt in the April and May economic growth figures, analysts said in comments posted on the website. of the company.

The six-day crisis also shows how quickly critical supplies can be frozen. The incident could give a sign of impending crises.

“Buyers in Asia are still more concerned about the possibility of disruptions to other routes such as the Strait of Hormuz and Malacca,” said Yanting Zhou, Wood Mackenzie, senior economist for the Asia-Pacific region. rather than the Suez Canal ”.

“This event also underscores the importance of having strategic oil reserves (SPR) in Asia, given the region’s reliance on crude oil imports of more than 80%,” Zhou said.

Based on official production and trade figures, China’s dependence on foreign oil last year rose to more than 73%.

In March, oil imports rose 21% year-on-year to nearly 11.7 million barrels / day (mbpd), up from an average of 10.8 mbpd in 2020, according to customs documents.

The reports also suggest that the GAC figures may not be all-inclusive, as China is believed to be secretly increasing imports from Iran, despite US sanctions.

Ship tracking experts have cited transfers of discounted oil from Iran to Chinese tankers in volume that have resulted in traffic congestion at coastal refineries on the coast of Shandong, Bloomberg News and Oilprice. com reported last month.

Reliance on Iranian imports could further undermine China’s energy security, as supply depends on increased traffic through the Strait of Hormuz from the Persian Gulf.

Late last month, China signed a widely reported 25-year deal to invest $ 400 billion (2.6 trillion yuan) in Iran in exchange for oil supplies despite US restraint.

SPR supply and volume diversity are China’s main protections against its growing dependence on imports. Concerns about a growing dependence on foreign energy sources have also spurred the development of more domestic resources including highly polluting coal.

China has built its SPR for more than a decade, following the example of the International Energy Agency (IEA) oil consumption members, but there are serious differences.

While IEA member states agree to transparent reporting on their emergency stockpiles, China rarely discloses any SPR data. Then, the data may be six months out of date or more.

Strategic secrets

China’s secrecy forces markets to guess whether it is buying for storage or consumption, further complicating the calculation of supply and demand.

China often hoards when prices are low, as in last year’s pandemic, but they also defy expectations by filling up when prices rise, causing them to rise higher when supplies are already scarce.

The IEA urges members to store 90-day imports as a measure against protracted emergencies, helping to stabilize world markets. China has pursued its own version of this practice.

Last year, China set a target to increase state reserves to cover 90 days of net imports, Bloomberg News reported. Stockpiles have since peaked at 100 days and climbed to 120 days, Bloomberg said, citing an unnamed source.

But the figures include both the government’s SPR and trade stocks, the report said, noting that China’s international oil companies are state-owned.

Last November, Reuters reported that China’s total oil reserves reached 1.16 billion barrels, or about 105 days of net imports, according to Beijing-based SIA Energy estimates.

Estimates by SIA and Energy Aspects Ltd. Based in London, the government’s SPR is expected to hold between 290 million and 370 million barrels by the end of last year. These figures imply only about 25 to 31 days of imports at March rates.

Considering the SPR volume alone, actual coverage may have decreased since 2017, when the National Energy Administration released one of its rare reports of stored volumes. Average daily imports have increased 38% since then.

In its report to the National People’s Congress last May and this March, the National Development and Reform Commission (NDRC) repeatedly mentioned “contingency plans” to deal with energy security risks, but the government’s top planning agency has yet to explain what the plan is.

The NDRC is committed to “promote oil and gas exploration and development” and “systematically strengthen our coal supply”, showing that such steps could be the scope of options for plan, in addition to expanding the Chinese navy’s presence.

Some analysts believe that China will continue to increase total imports even though storage capacity is reaching its limit.

“Regarding crude oil reserves, we believe that China’s target will not stop at 100 or 120 days,” said Mia Geng, an analyst at FGE, a London-based oil and gas consulting firm. Reserve.

“National security is one of the top priorities in the coming years and this will maintain constant stockpiles,” Geng told Bloomberg.



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