Trade Resources Industry Views China Oil Demand Rose 2.7% in June Versus a Year Ago

China Oil Demand Rose 2.7% in June Versus a Year Ago

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China's apparent oil demand* in June turned directions from May and climbed  2.7% versus the same month a year ago to 41.94 million metric tons (mt) or an average 10.25 million barrels per day (b/d), according to a just-released Platts analysis of Chinese government data. On a month-over-month basis, apparent oil demand was up 8.6% from May.

"Analysts attributed the June increase to stronger fuel demand by the farming and agricultural sectors for the summer planting season," said Song Yen Ling, Platts senior writer for China. "It's also interesting to note that June marked the second month that China's apparent oil demand crossed the 10 million b/d this year, following February's 10.62 million b/d."

The robust month-over-month demand growth helped push the nation's apparent oil demand for the first half of the year to 9.91 million b/d with the second-quarter growth pace up 1.9% versus the same quarter a year ago. Contributing to the demand growth was China's stronger 7.5% gross domestic product (GDP). In the first quarter, China's apparent oil demand contracted by 0.6% amid GDP growth of 7.4%.

First-half 2014 growth in apparent oil demand was a 0.6% increase from the first half 2013 and marked the slowest pace for the period since Platts started compiling data in 2005.

China's refinery throughput averaged 10.22 million b/d last month, up 5.8% on a year-over-year basis, according to the July 16 data from China's National Bureau of Statistics. On the back of the increased refinery output, net oil product imports plunged 91.5% in June from a year earlier to 110,000 mt, data from China's General Administration of Customs showed July 10. This was the lowest level since August 2013.

"Gasoline and jet/kerosene apparent demand grew significantly in the first half, continuing a well-publicized trend the past two years as oil demand growth from the transport sector continues to outpace that of the industrial segment." said Song.

Gasoline retained its status as the backbone of China's oil demand growth, showing a leap of 15.6% last month versus June 2013 to 2.5 million b/d.  This put first-half 2014 apparent demand for the fuel up 10.5% versus the same period a year ago.

Elsewhere, gasoil apparent demand in June was up 4.4% from a year earlier to 3.58 million b/d, the highest rate since September 2012. Continued growth is expected in the wake of government stimulus measures targeting infrastructure projects. But on a first-half 2014 basis, gasoil demand actually contracted 0.4% from the same period a year ago, to 3.44 million b/d.

"Gasoil will remain a key product to watch as, despite the waning growth, demand for it still remains the largest among all the major oil products," Song noted.

Fuel oil was the only product to show a contraction in apparent demand in June, slumping 16.8% year over year to 618,100 b/d. First-half demand slipped 16% from a year ago to 636,800 b/d.

Consumption of imported fuel oil – widely used as a raw material for the manufacturing of refined petroleum products by small, independent refiners known as "teapot" refineries – has slowed in the last two years as refiners gained greater access to domestic crude oil. Also, since late 2013 teapot refiners have increasingly used imported bitumen and tar blend, known domestically as asphalt, as feedstock in their toppers, further cutting into demand for imported fuel oil.

Source: http://www.youroilandgasnews.com/platts+report+announces+china+oil+demand+rose+2.7%25+in+june+versus+a+year+ago_103842.html
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Platts Report Announces China Oil Demand Rose 2.7% in June Versus a Year Ago
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