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 |