China-Iran Trade Report (June 2020)
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Official Data Shows Chinese Imports of Iranian Oil Hitting “Zero”
New data released by the General Administration of Customs of the People’s Republic of China (GACC) indicates that China imported just $212,000 of crude oil from Iran in June, an effective “zeroing” of declared imports.
There are a few possible explanations for the remarkable low figure. It may be an error, although this is unlikely given the month-on-month fall in China’s declared imports is consistent with the long-term trend. It is also unlikely because the same figure can be seen in both the English-language and Chinese-language monthly reports published by GACC.
Alternatively, it could reflect a situation where essentially all of Iran’s direct deliveries of oil were placed into bonded storage, and therefore not in-fact imported by Chinese refiners.
However, the most likely explanation is that China’s oil imports from Iran are now fully intermediated, with Malaysia serving as the re-export hub. China’s declared imports of crude oil from Malaysia exceeded $1 billion for the first time since February, marking the third straight month that imports from Malaysia have risen while imports from Iran have fallen. Data from TankerTrackers.com places Iranian oil exports in May at 753,862 bpd—down from 900,000 bpd in April—these exports would have arrived in Chinese ports in the month of June.
Nonetheless, the fact that China has effectively declared “zero” imports of Iranian oil in June is symbolically important, especially as the two countries seek to restart negotiations on an upgraded economic and political partnership.
Looking to non-oil trade, Chinese non-oil imports from Iran rose 27 percent from their May totals to reach USD 415 million, a reflection of the recovery in manufacturing output in Iran as the country has emerged from the COVID-19 lockdown.
Meanwhile, Chinese exports to Iran totaled just USD 564 million, the lowest level since February 2019. June exports of goods in HS Section 16 (which includes machinery and mechanical appliances) were down just 1 percent, stabilizing after the 15 percent fall in the monthly export value between April and May. However, exports fell 60 percent month-to-month in HS Section 17 (which includes vehicles and transport equipment) and 31 percent in HS Section 6 (which includes plastics and related articles). These low export totals correspond to growing concerns among Iranian manufacturers over the availability and affordability of manufacturing inputs and equipment.
