China's apparent oil demand in 2015 grew 5.8% year on year to 11.11 million b/d, the fastest pace since 2011, despite the country's economy growing at the slowest rate since 1990, Platts calculations based on recently released official data showed.
Apparent demand in 2011 expanded at 7.1% on year to 9.62 million b/d.
The strong apparent demand in 2015 was driven by transportation fuels gasoline and jet/kerosene, as well as LPG and fuel oil.
But Platts China Oil Analytics expect the country's oil demand growth to slow to around 2.4% in 2016.
China's GDP expanded 6.9% in 2015, the slowest rate since 1990. Standard & Poor's, like Platts a unit of McGraw Hill Financial, expects China's GDP to grow at 6.3% and 6.1% in 2016 and 2017, respectively.
China does not release official oil demand data. Platts calculates overall apparent oil demand by adding official data on crude throughput and net product imports. Apparent demand for individual products is calculated by adding official data on products output and net product imports.
LPG GROWTH
Additional demand for petrochemical feedstock from new propane dehydrogenation plants lifted apparent demand for LPG by 20% to 1.26 million b/d in 2015, the highest since 2009.
Two new PDH plants came online in 2015, with total annual propane appetite of 1.62 million mt/year. Currently, China has six PDH plants, with designed propane processing capacity of around 4 million mt/year, or 127,120 b/d, according to Platts calculations.
On the back of healthy demand from residential and traditional petrochemical plants, net LPG imports surged 71.3% to 378,000 b/d last year, according to Platts calculations.
COA expects relatively lesser PDH capacity to come online in 2016 as construction activity had slowed amid overcapacity. This could slow the growth to 9% this year.
Only Oriental Energy has said it would start its second PDH plant by mid-2016. The plant's annual propane demand is at 25,270 b/d.
JET/KEROSENE, GASOLINE
Driven by strong growth from the aviation sector, China's apparent demand for jet fuel/kerosene rose 15.9% from a year earlier to 693,000 b/d during 2015, the highest year-on-year increase since 2006, which saw a growth of 16.1%.
According to latest data from the Civil Aviation Administration of China, overall aviation traffic continued to grow at a steady pace. Over the first 11 months of 2015, total traffic turnover rose 13.7% compared with the same period a year earlier. Meanwhile, turnover for international routes rose 21.5% year on year and domestic turnover was up 10%.
Jet fuel/kerosene consumption could come in higher in January and February because of the Chinese New Year holiday.
COA expects the expansion would be back to about 7.5% in 2016.
Meanwhile, gasoline also registered healthy growth at 9% year on year to 2.68 million b/d in 2015.
The country's auto sales rose 4.71% in 2015 from a year earlier, compared with a growth rate of 6.86% in 2014 and 13.87% in 2013, data from the China Association of Automobile Manufacturers' showed.
But sales of gasoline-guzzling sport utility vehicles jumped 52.54% year on year, stronger than the 36.44% growth in 2014 and the 49.41% rise in 2013, the data showed.
SUV sales have been the driving force behind China's gasoline demand growth recently. COA expects gasoline demand would keep rising at a healthy rate of around 8.2% in 2016 as low oil prices encourage driving.
FUEL OIL, GASOIL DEMAND
After dropping for two successive years in 2013 and 2014, China's apparent demand for fuel oil rebounded to grow by 13.2% to 927,000 b/d on the back of strong demand for feedstock bitumen blend.
Customs data suggested that bitumen blend imports surged 201.2% year on year in 2015, while fuel oil imports were down 12.7%. Imported bitumen blend barrels are mainly used by teapot refineries as feedstock in coking units, to avoid consumption tax.
After the government granted teapot refineries access to imported crude, crude has been the top feedstock choice, while bitumen blend has fallen out of favor since December.
Therefore, COA expects China's demand for fuel oil to fall by double digits in 2016.
Apparent demand for gasoil registered a 0.5% decline in 2015 to reflect slower GDP growth.
But it was not the first time for China to note a year-on-year retreat in gasoil demand. The last decrease was in 2013, when it fell 0.6%.
The fuel is used in a range of sectors, with the transport sector accounting for 60-70% of demand and the remainder soaked up by farming, manufacturing, construction and mining industries.
Looking forward, China's demand for the fuel is expected to shrink by about 0.3% this year, according to COA.
