China’s September oil demand reaches lowest level in 2011

Platts Report:

Republic’s oil consumption cools in Q3 after surging in first two quarters

Platts' China oil demand analysis: higher, yet slower

Year-on-year, Chinese oil demand continues to rise. But that annual comparison continues to decline just a little bit each month. September was no different

Singapore - October 24, 2011

China's apparent oil demand* in September grew just 3.1% year on year to 36.63 million metric tons (mt), or an average of 8.95 million barrels per day (b/d). This is the lowest level that the country’s oil demand has reached this year, according to a Platts analysis based on crude oil statistics recently released by the Chinese government.

September was also the second straight month that China’s oil demand has slipped to less than nine million b/d. This came on the back of reduced refinery runs due to heavy routine turnarounds and refinery incidents as well as declining demand for oil products.

In August, apparent oil demand was at 8.98 million b/d, the previous low of the year.

Apparent oil demand in the third quarter was the lowest so far this year at 8.99 million b/d, compared with 9.33 million b/d in Q1 and 9.23 million b/d in Q2.

"Refinery throughputs and net product imports declined due to scheduled maintenance and slowdown in demand for refined products,” said Calvin Lee, Platts senior writer, China. "Chinese refineries are also reluctant to boost production too much because of depressed refining margins."

In September, crude throughput increased by 3.4% year on year to 36.1 million mt, or an average of 8.82 million b/d.

Several Chinese refineries with crude distillation unit (CDU) capacities of 200,822 b/d or more were shut for maintenance, including Sinopec's 200,822-b/d Luoyang refinery, the 281,151-b/d Sinopec Shanghai refinery, PetroChina's 321,315-b/d Dushanzi refinery and the 200,822-b/d PetroChina Qinzhou refinery.

In addition, any boost to China's total crude runs from a restart by PetroChina's 411,685--b/d Dalian refinery in early September after an earlier fire was canceled out by a reduction in crude throughput by the 226,929-b/d Sinopec Gaoqiao refinery following a fire at a secondary unit in late September.

At the same time, the country imported 1.1% less refined products in September compared with a year ago at 2.77 million mt. However, refined product exports increased 7.2% in September to 2.24 million mt.

Net product imports for September were at 0.53 million mt (0.13 million b/d) – the lowest this year.

September's net product imports were 14.5% less than a year ago and 57.3% less than the 1.24 million mt (0.29 million b/d) in August, as imports slumped due to the declining consumption for refined products.

According to a report published by the country's economic planning agency, the National Development and Reform Commission, apparent consumption of gasoline, diesel and jet fuel grew only 3.2% year on year in Q3, compared with an increase of 5% in Q2 and a growth of 9.3% in Q1 over the year-ago periods.

The slowdown is attributed to a slowdown in car sales and a decline in demand growth in other economic sectors.

"Analysts expect Chinese refinery throughput to rebound to above nine million b/d from October onward with the completion of the refinery turnarounds. They also project China's overall oil demand to grow by about 6-7% for the entire year compared with 2010, which is still a pretty solid growth rate if you consider the current global macroeconomic environment," said Lee.

MONTHLY TRADE DATA IN MILLION METRIC TONS:

*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.

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.

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