Platts Report: China Oil Demand Fell 0.7% in May versus a Year Ago Gasoil, Fuel Oil Demand Contracted On Poor Fundamentals
China's apparent oil demand* in May dipped 0.7% compared with the same month last year to 39.92 million metric tons (mt) or an average 9.44 million barrels per day (b/d), a just-released Platts analysis of Chinese government data showed.
Apparent oil demand last month was at its lowest level in nine months -- recording the first year-on-year contraction since January -- following three months of relatively slow growth.
On a month-over-month basis, apparent oil demand in May fell 3.2% from April, reflecting China's underlying damped economic performance. This was the third consecutive year that apparent oil demand contracted in May from April.
This was counter to prior years, when apparent oil demand traditionally accelerated in the second quarter compared with March due to a pick-up in industrial activity in spring.
China's refinery crude oil throughput volumes in May rose 3.5% from a year earlier to a four-month low of 9.54 million b/d, according to the latest data from China's National Bureau of Statistics.
Net crude imports for May were up 9.4% from the same period a year ago to 6.17 million b/d. However, China became a net exporter of oil products last month, with exports outpacing imports by 410,000 mt. This compared with net oil product imports of 1.25 million mt in May 2013.
China has significantly reduced its imports of jet/kerosene and fuel oil this year due to a combination of sluggish demand and increased domestic output. Exports of gasoline and gasoil have remained steady from a year ago.
China was a net oil products exporter in March, the first time since January 2010, but returned to being a net importer in April.
'We have seen a distinct fall in China's net oil product imports in the last year,' said Song Yen Ling, Platts senior writer for China. 'This is mainly because domestic demand growth has slowed while refiners' output has grown, the result of expanded refining capacity planned before the current slowdown.'
Over the first five months of the year, China's apparent oil demand was essentially flat, rising a mere 0.2% from the same period of 2013 to 9.85 million b/d.
In China's individual oil products markets, gasoil apparent demand in May flipped to negative growth, contracting by 1.6% year over year to 3.33 million b/d. Domestic production dipped 0.7% year over year to 14.15 million mt. Net exports surged 66.7% from a year earlier to 300,000 mt. Gasoil demand in China has slowed as the nation's economic growth has slowed.
Gasoline apparent demand increased 10.3% last month from a year earlier to 2.36 million b/d, on strong transport sector consumption. Domestic refiners' gasoline output increased 7.9% on a year-over-year basis to 8.86 million mt, while net exports fell some 38.1% year over year to a 17-month low of 260,000 mt.
Fuel oil apparent demand last month plummeted 33.6% from a year ago to 512,000 b/d on the back of a 73.5% slump in net imports to 400,000 mt. Domestic production of fuel oil in May was down 6.9% to 2.1 million mt.
Consumption of imported fuel oil - used significantly as a raw material for the manufacturing of refined petroleum products by small, independent refiners known as 'teapot' refineries - has taken a hit the past two years as the refiners have gained greater access to domestic crude oil, which is an alternate feedstock.
Month-to-month demand in China is generally viewed to be subject to short-term anomalies which are of interest and important to note, but which often fail to reveal the country's underlying demand trends. Year-to-year comparisons are viewed by the marketplace to be more indicative of the country's energy profile.
*Platts calculates China's apparent or implied oil demand on the basis of crude throughput volumes at the domestic refineries and net oil product imports, as reported by the National Bureau of Statistics and Chinese customs. Platts also takes into account undeclared revisions in NBS historical data.
The government releases data on imports, exports, domestic crude production and refinery throughput data, but does not give official data on the country's actual oil consumption figure and oil stockpiles. Official statistics on oil storage are released intermittently.
Platts releases its monthly calculation of China's apparent demand between the 18th and 26th of every month via press release and via its website. Any use of this information must be appropriately attributed to Platts.
Platts uses a conversion rate of 7.33 barrels of crude per metric ton, the widely-accepted benchmark for markets East of Suez.
For more information on crude oil, visit the Platts website at www.platts.com. For Chinese-language information on oil and the energy and metals markets, visit http://www.platts.cn/.
Founded in 1909, Platts is a leading global provider of energy, petrochemicals, metals and agriculture information and a premier source of benchmark prices for the physical and futures markets. Platts' news, pricing, analytics, commentary and conferences help customers make better-informed trading and business decisions and help the markets operate with greater transparency and efficiency. Customers in more than 150 countries benefit from Platts' coverage of the biofuels, carbon emissions, coal, electricity, oil, natural gas, metals, nuclear power, petrochemical, shipping and sugar markets. A division of McGraw Hill Financial (NYSE: MHFI), Platts is based in London with approximately 900 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.
About McGraw Hill Financial
McGraw Hill Financial (NYSE: MHFI), a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power and McGraw Hill Construction. The Company has approximately 17,000 employees in 29 countries. Additional information is available at www.mhfi.com.