Platts Report: China Oil Demand Fell 2.1% in July Versus a Year Ago July Demand Down Month over Month; China Becomes Net Exporter of Oil Products

SINGAPORE, Aug. 27, 2014 /PRNewswire/ -- China's apparent oil demand* in July decreased by 2.1% over the same month a year ago, according to a just-released Platts analysis of Chinese government data.

The apparent oil demand in July was 40.63 million mt or 9.61 million barrels per day (b/d). On a month-over-month basis, this was a 6.2% drop from 10.25 million b/d in June. The fall reversed the positive growth experienced in June.

The contraction occurred because China became a net exporter of oil products in July, with net outflows totaling 450,000 mt, according to data released by the General Administration of Customs on August 8.

In July, China reduced its imports of some oil products, including fuel oil and jet/kerosene; while increasing exports of others, such as gasoil and gasoline. This resulted from a combination of weakening demand – as in the case of gasoil and fuel oil – and higher domestic production for jet/kerosene and gasoline.

Overall, oil product imports during the month slumped 42.8% year-over-year to 1.86 million mt, while exports rose 13.8% to 2.31 million mt.

"The weakness in China's oil demand reflects the ongoing slowdown in its economy," James Bourne, Platts associate editorial director for Asia news. "It is the third time this year that the country has flipped to being a net oil product exporter. This was also seen in March and May, suggesting weakening oil demand."

In July, crude oil throughput by domestic refineries edged up 2% year over year to 9.71 million b/d. However, this represents a 5% slide from the June level of 10.22 million b/d, according to the August 13 data from China's National Bureau of Statistics.

China's apparent oil demand over the first seven months of 2014 edged up just 0.1% to 9.86 million b/d, the slowest pace of growth for the period since Platts started compiling Chinese oil demand data in 2005. In comparison, apparent oil demand expanded by 4% from the January-July period last year.

Gasoline apparent demand rose 8.6% in July from a year earlier to 8.51 million mt. Year-to-date apparent demand for the fuel, used in the booming transport sector, rose 10% year over year.

"Domestic refiners have been raising their yields in favor of gasoline and jet fuel/kerosene and away from gasoil to suit the country's current oil demand profile," said Bourne.

Meanwhile, gasoil again contracted in July due to sluggish industrial activity, with apparent demand declining 2.2% year on year to 14.06 million mt, after growing 4.4% year on year in June. Gasoil demand has been hit by China's economic growth slowdown.

Similarly, apparent demand for fuel oil fell 28% year on year in July to 2.28 million mt, the lowest level since August 2013, as net imports plunged 77% to 260,000 mt.

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.

MONTHLY TRADE DATA IN MILLION METRIC TONS


Jul '14

Jul '13

% Chg

Jun '14

May '14

Apr '14

Mar '14

Net crude imports (million mt)

23.76

26.11

-9.0

23.28

26.08

27.88

23.52

Crude production (million mt)

17.34

17.15

+1.1

17.50

17.76

16.98

17.64

Apparent demand (million mt)

40.63

41.49

-2.1

41.94

39.92

39.92

41.55

Apparent demand ('000 b/d)

9,607

9,810

-2.1

10,247

9,439

9,754

9,825

Sources: China's General Administration of Customs, National Bureau of Statistics, Platts

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/.

About Platts: 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 more than 1000 employees in more than 15 offices worldwide. Additional information is available at http://www.platts.com.

About McGraw Hill Financial: McGraw Hill Financial is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's 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 18,000 employees in 30 countries. Additional information is available at www.mhfi.com.

SOURCE Platts



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