Using satellite imagery to monitor China amid COVID-19

There are signs of economic life in China after months of paralysis.

A car factory in Tianjin. A freight railyard in Wuhan. Oil storage tanks across China.

The impact of China’s lockdown was highly visible in these places. Now, the signs are pointing in a different direction, suggesting efforts are underway to revive the world’s second-largest economy.

That conclusion is based on Ursa’s analysis of satellite imagery in China, derived from synthetic aperture radar (SAR).

Let’s look at some examples, starting with a car manufacturing plant in northeastern China.

The FAW-Volkswagen factory is located in Tianjin, a port city 115 km from Beijing.

Automobile plants typically park finished vehicles in lots adjacent to the factories. Monitoring these lots can indicate operating levels. When production stops, the lot will empty of cars, and fill up again when assembly lines restart.

The image below shows the lot (circled in red) at the Tianjin car plant.

This optical image was taken on a clear day. But what if the weather was cloudy?

That’s why using SAR can be a more reliable technology because the radar works in any weather, day or night.

You cannot quite count the number of cars with the naked eye, as easily you could with an optical image.

SAR imagery consists of grainy, black and white pixels. The example below also shows the Tianjin car factory between March 12 and April 5.

Ursa can analyze SAR imagery to determine the presence of man-made objects, such as a car.

The presence of more “bright” or “white” areas means there is greater SAR energy, which means more cars in the parking lot.

We quantified the SAR energy and developed an index. A score above 1 means more full of cars than normal during the time period examined. A score below 1 means less full.

Using the SAR activity index, we observed a clear drop in February 2020, following the first reported case of COVID-19 in Tianjin, China.

By March, restrictions eased allowing workers to resume shifts. The graph above shows activity hasn’t returned to pre-coronavirus levels, but the latest measurement (April 5) indicates some recovery.

In Wuhan, it wasn’t until April 8 that authorities lifted the lockdown after a 76-day period.

That decision appeared to have an immediate impact at the city’s freight rail station.

The North Wuhan Railway Station is one of the largest facilities of its kind in China, with 112 tracks and 650 switches.

North Wuhan Railway Station, China

We also analyzed SAR imagery of the North Wuhan station to determine if railway traffic changed as a result of travel restrictions due to COVID-19.

Using the SAR activity index, our team of radar imagery experts noticed train activity fell after travel restrictions began January 23 in Wuhan. Activity remained at a 16-month low through March.

The highest daily record for new COVID-19 cases in Hubei Province was February 13. A turning point came March 19 when China reported zero new local infections.

On April 8, the same day authorities ended the Wuhan lockdown, activity jumped at the North Wuhan Railway Station.

More people and goods moving invariably means more oil consumption.

Refineries respond to increased demand by churning out more gasoline and diesel, which requires burning more crude oil.

Crude oil is pulled from storage tanks, resulting in lower inventory levels until fresh supplies arrive.

That’s what we’ve seen in China. Over the last few weeks, the country’s crude inventories have fallen after hitting all-time highs.

Ursa uses SAR to measure global crude inventories, including in China, on a weekly basis. Our China coverage includes 41 locations, with a total capacity of 1.35 billion barrels.

Consistent builds since February, as a result of demand destruction, pushed China’s crude inventories to an all-time high the week ending March 12, according to Ursa data.

Stocks kept climbing until March 26, but since then have dipped slightly. The main catalyst appears to have been refinery activity.

Waterborne imports have increased to normal levels, averaging approximately 10 million barrels per day (bpd) so far in April, according to ClipperData.

The combination of rising imports and falling inventories implies higher refiner runs.

In Shandong Province, home to most of China’s independent “teapot” refiners, crude inventories rose 14 straight weeks through March 19, but then fell the next three weeks, indicating an uptick in refinery runs and demand.

Whether these signals are temporary or not will ultimately depend on the ability to contain the coronavirus. Another wave of cases would likely alter the direction.

Ursa is continuously monitoring vital locations around the world using satellite imagery to provide a deeper understanding of the socio-economic impacts of COVID-19.

If you’re interested in learning more, please email us.