China's apparent oil demand in June surged 11.7% year on year to 40.89 million mt, or an average 9.99 million b/d, according to Platts' estimates Monday, based on the latest preliminary government data.
This is the highest growth rate seen since February 2011, when apparent oil demand surged 12% year on year to 9.66 million b/d.
Apparent oil demand was also 4.8% higher than in May, when demand averaged 9.53 million b/d -- a nine-month low.
China does not release official data on oil demand or commercial and strategic oil inventories. Platts calculates apparent oil demand based on official data on refiners' crude throughput and net oil product imports. REFINERY RUNS REBOUND FROM LOW BASE A YEAR AGO
China saw a 10.8% year on year surge in refinery runs, with a total 39.6 million mt of crude refined last month, or 9.68 million b/d, according to National Bureau of Statistics data released Monday. The volume refined was also up 4.8% from May.
Chinese refiners were expected to raise their run rates in June following heavy maintenance over April and May.
In a report on Friday, Beijing-based consultancy 3E said refining margins also "gained slightly" going into July mainly because of lower prices of domestic crude.
In comparison, refinery runs over January-May had gone up by just 2.1% from same period last year, and this was mainly because refining throughput had been at a low base a year ago.
Apparent oil demand in June 2012 had contracted by 2.6% year on year to 8.94 million b/d, on the back of a 0.6% decrease in refinery runs to 8.73 million b/d -- the lowest levels for both figures in 2012 -- due to a combination of some refineries undergoing maintenance as well as weak demand for gasoline and gasoil. OIL PRODUCT IMPORTS ALSO RISE
In addition to higher refinery runs, China's oil demand last month was buoyed by oil product imports, which rose 11.9% year on year to 3.28 million mt, according to data released by the General Administration of Customs on July 10. Product exports fell 3.9% year on year to 1.99 million mt, which brought net product imports to 1.29 million mt -- a 50% increase year on year.
During the first half of the year, China's apparent oil demand totaled 243.69 million mt or an average 9.87 million b/d, a 3.9% increase year on year, according to Platts' calculations. Refinery runs from January to June rose 4.1% year on year to 236.79 million mt or an average 9.59 million b/d while net oil product imports fell 17.5% year on year to 6.9 million mt. Apparent demand growth in the first six months of 2013 was more robust than the 0.7% expansion seen over the same period last year.
GDP GROWTH LIKELY TO SLOW
China's oil data for June was in contrast to its macroeconomic data. The NBS said Monday the economy expanded by 7.5% in the second quarter, slowing from 7.7% in Q1 and bringing overall first-half economic growth to 7.6%.
This was in line with most analyst expectations and the government emphasized that moderation in economic growth was to be expected as it was currently focused on structural adjustment.
Industrial production growth slowed to 8.9% year on year in June, from 9.2% in May, bringing first-half industrial output expansion to 9.3% year on year, the bureau said.
This followed the release of trade data last week, which saw the economy's total exports and imports in June contract by 3.1% and 0.7%, respectively, year on year.
On Monday Nomura Research downgraded its GDP forecast for 2014 from 7.5% to 6.9%, primarily because it believes the government will lower its own target for 2014 GDP growth to 7% at the end of this year. Additionally, the current de-leveraging happening in the money markets is expected to continue well into next year, creating a liquidity squeeze, Nomura's chief China economist Zhiwei Zhang said in conference call. The bank is forecasting GDP growth of 7.4% in Q3 and 7.2% in Q4, with overall 2013 growth at 7.5%.
In a note on Monday, Credit Suisse said it does not expect imminent expansionary policies to boost growth momentum, which could "weaken further amid tightened liquidity conditions." Credit Suisse said it is keeping its GDP growth forecast of 7.4% in 2013 unchanged.
HSBC Rsearch said in a note the latest data suggests growth will likely "dip below Beijing's 7.5% annual target into H2," pressuring the government to strike a balance between stabilizing growth and making structural reforms. The bank expects GDP expansion to average 7.4% this year.
