“Conflict Between China And Vietnam Is Imminent" - China Piles Troops, Tanks, Artillery And APCs Near Vietnam Border
China is stockpiling oil for its strategic petroleum reserve at a record pace, intervening on a scale large enough to send a powerful pulse through the world crude market.
The move comes as tensions mount in the South China Sea, and the West prepares possible oil sanctions against Russia over the crisis in Eastern Ukraine. Analysts believe China is quietly building up buffers against a possible spike in oil prices or disruptions in supply.
The International Energy Agency (IEA) said in its latest monthly report that China imported 6.81m barrels a day in April, an all-time high. This is raising eyebrows since China’s economy has been slowing for months, with slump conditions in the steel industry and a sharp downturn in new construction.
The agency estimates that 1.4m b/d was funnelled into China’s fast-expanding network of storage facilities, deeming it “an unprecedented build”. Shipments were heavily concentrated at Chinese ports nearest the new reserve basins at Tianjin and Huangdao. “We think this is a big deal,” said one official.
China accounts for 40pc of all growth in world oil demand, so any serious boost to its strategic reserves tightens the global supply almost instantly and pushes up the spot price.
Michael Lewis, head of commodities at Deutsche Bank, said Chinese officials at Beijing's Strategic Reserve Bureau are playing the oil market tactically, or “buying the dips” in trader parlance. They add to stocks whenever Brent crude prices fall to key support lines, as occurred earlier this Spring. This is currently around $105.
“It's is very similar to what they have been doing with copper. Whenever it drops below $7,000 (a tonne), they see it as a buying opportunity. They do the same with agricultural commodities,” he said.
China is putting a floor of sorts underneath the global oil market, calling into question predictions by the big oil trading banks that prices will deflate this year as more crude comes on stream from Libya, Iraq, and Iran, and as the US keeps adding supply shale.
The strategic buying could go on for a long time since China is rapidly expanding its reserve capacity from 160m barrels to 500m by 2020, with sites scattered across the country.
John Mitchell from Chatham House says China has stocks to cover 46 days of imports compared to 209 for the US, based on estimates from last year. India is acutely vulnerable to any disruption with just 12 days cover. The minimum safe threshold for OECD states is deemed to be 90 days.
Chinese officials are increasingly nervous as the the country's import dependency keeps climbing, reaching 60pc level this year. This is deemed to be the danger line. Planners have been studying closely what would happen in a global conflict such as full-blown Mid-East war or closure of the Straints of Hormuz. East Asia is now far more vulnerable to Mid-East oil disruptions than the US.
China's stock-build comes as the West steps up threats of “Stage 3” sanctions against Russia, to be triggered if the Kremlin continues to disrupt the Ukrainian elections through paramilitary proxies in the Donbass region.
Over 3000 Chinese Evacuated (By Boat & Plane) As Vietnam's Anti-China Riots Escalate; Taiwan Also On "High Alert"
Submitted by Tyler Durden on 05/17/2014 22:33 -0400
China began evacuating hundreds of its nationals from Vietnam (via at least 2 planes and 5 ships) as the anti-China protests have become increasingly deadly following Beijing's attempt to deploy an oil drill in Vietnamese disputed waters (detailed here, here, here, and here)...
- *CHINA SENDING 5 SHIPS TO VIETNAM TO EVACUATE CHINESE: XINHUA
- *HUNDREDS OF VIETNAMESE SECURITY IN CENTRAL HO CHI MINH CITY
- *VIETNAM PRIME MINISTER ISSUES DIRECTIVE TO PREVENT PROTESTS
- *VIETNAM GOVT TAKES ACTION TO PREVENT RIOTS: BINH
Hundreds of police and security forces are in central Ho Chi Minh city and the Chinese consulate is under heavy guard. Tensions across the ASEAN region are growung as Taiwan is on "high alert" but the bloc’s inability to craft a united response to Chinese aggression signals a further decline in its regional clout.