September saw Brazil become the third-largest provider of oil to communist China for 2020 so far, according to data the Chinese Customs Administration revealed this week.
The data show total exports from Brazil to China last month were 4.49 million tonnes, equivalent to an average of 1.1 million barrels per day (BPD). This is a more than 30-percent increase compared with September 2019, when the figure was around 2.96 million tonnes and 723,000 BPD.
The total exports from January to September this year amounted to 33.69 million, equivalent to around 915,000 BPD. This is a 15.6-percent increase against the same period last year, despite the fact that this year both countries have faced lockdowns as a preventative measure against the Chinese coronavirus pandemic.
The rise in shipments means that China now represents more than 70 percent of Brazil’s total oil exports, which remain a vital part of the country’s economy.
Reuters reported in May that executives at Brazil’s state-run oil company Petrobras remained bullish about the future at the time and saw no need for cuts in oil production, despite a fall in global demand, largely because the demand in the Chinese market remained robust while domestic consumption is beginning to return to pre-pandemic levels.
Growing exports to China are in part the result of the company’s close relationship with independent refineries in China’s Shandong Province, which have become one of Petrobras’s leading customers. This also comes at a time when American oil firms, including Chevron, have cut back their production in response to falling demand.
“Our commercial team has been developing a long-term relationship with Shandong refineries in China where our oil has strong demand even during the crisis,” Petrobas Chief Logistics Officer André Barreto Chiarini said during an investors call, the news agency reported. “Crude oil from the Lula, Iracema, Sapinhoa, and Buzios fields have the same overall characteristics as specific Chinese oils … that are experiencing declining production.”
The move towards Latin American imports also comes as China faces pressure to move away from importing Iranian oil to avoid U.S. economic sanctions, which have already been imposed on various Chinese companies caught violating them. In the quarter of 2020, Iranian exports to China fell by a massive 52 percent, with that figure likely to continue falling unless sanctions relief is provided.
Despite campaigning on a hardline anti-China platform similar to President Donald Trump, Brazilian President Jair Bolsonaro has seemingly embraced a warm relationship with Beijing since assuming office at the beginning of 2019. Last year, Bolsonaro signed eight separate trade agreements with the communist state and declared that Brazil “needs China” and that the two countries were “completely aligned, in a way that reaches beyond our commercial and business relationship.”