CHINA’S apparent oil demand in August 2016 contracted by 4.3% from the same month last year to 10.76 million barrels per day (b/d), according to an analysis of Chinese government data by S&P Global Platts.
According to Platts’ latest Chinese figures, refinery throughput in August averaged 10.47 million b/d, data from China’s National Bureau of Statistics (NBS) showed.
This was a 0.6% drop from the same month last year and down 0.5% from July.
Platts said refinery runs in August declined due to heavy maintenance programs undertaken by both state-owned and independent refineries.
Net imports up
China’s net imports of key oil products – liquid petroleum gas (LPG), naphtha, gasoline, jet fuel, gasoil and fuel oil — in August rebounded to 286,000 b/d from 35,000 b/d in July. Total imports rose 8.5% on a month-over-month basis to 973,000 b/d, while exports fell 20.3% over the same period to 687,000 b/d, data from data from China’s General Administration of Customs showed.
In contrast, net imports of key oil products had averaged 700,000 b/d in August last year.
Platts reported that the year-over-year decline in overall demand in August was due mainly to a contraction in apparent demand for gasoil, fuel oil as well as for gasoline. Demand for transport fuels saw some seasonal weakness during the month but is expected to rebound given China’s Golden Week holiday in early October.
Industrial activity slows
Gasoil demand was likely hit by sluggish industrial activity given ongoing curbs in overcapacity in sectors such as steel and coal, while construction activities were also affected by heavy rainfall in south China.
The gasoil apparent demand figure for August was down 7.2% decline from a year ago to 3.23 million b/d, as exports surged 48% to 257,000 b/d and production slipped 5% to 3.47 million b/d.
Gasoline apparent demand also saw a rare year-over-year contraction to 3.23 million b/d. Gasoline production rose 0.7% year over year and exports surged 43.5% to 184,000 b/d.
Fuel oil apparent demand saw the largest drop, down 36% from a year earlier to 690,000 b/d. China, once a major importer of fuel oil, has significantly reduced its intake of the fuel since the end of last year.
This, as major end-users in the refining sector no longer relied on it as their primary cracking feedstock. China’s total fuel oil imports, including those classified as petroleum bitumen blend, slumped 55% in August on a year-over-year basis to 245,000 b/d.
Over the first eight months of 2016, China’s apparent oil demand growth declined 1.6% to an average 11.05 million b/d. Growth has eased considerably due to a decline in gasoil and fuel oil consumption, given China’s economic growth slowdown, as well as the deregulations in the refining sector which have led to far less consumption of residual oil as feedstock by the country’s independent refineries.
Solid first eight months
Between January and August, China’s apparent oil demand had shown robust growth of 9.1% to an average 11.24 million b/d.
“It is likely that if exports of oil products continue unabated, overall apparent demand for the whole of 2016 could be lower than in 2015,” said Song Yen Ling, senior analyst with Platts China Oil Analytics.
“Chinese refiners have typically built product stocks toward the end of the year but ongoing oversupply in the domestic market could mean that exports will be sustained.”