China oil demand fell 1.3% year over year in AprilStaff writer ▼ | June 9, 2016
China's apparent oil demand contracted by 1.3% in April 2016 from a year earlier to 11.36 million barrels per day (b/d).
Energy Platts China Oil Analytics
Refinery throughput in April averaged 10.93 million b/d, data from the China's National Bureau of Statistics (NBS) showed May 14. This was a 2.3% increase year over year and a 3% rise month over month.
Net imports of key oil products however slumped 48.1% from a year earlier to an average 430,000 b/d in April, driven by sustained exports of transport fuels, according to data from China's General Administration of Customs.
The contraction in oil demand in April represented the third consecutive month of negative growth and was largely attributable to a considerable decline in gasoil and fuel oil demand, amid a slowed Chinese economy.
Over the first four months of 2016, apparent oil demand averaged 11.15 million b/d, down 0.3%. This compared with 8.4% expansion during January-April 2015.
China's oil demand growth is expected to moderate significantly in 2016 as gross domestic product growth slows on the back of economic rebalancing. China's government data shows the economy expanded by 6.7% in the first quarter of this year, a decline from 6.8% in the fourth quarter of 2015.
China's 2016 apparent oil demand is forecast to grow by less than 2%, according to Platts China Oil Analytics, an on-line platform for supply/demand and trade data, of S&P Global Platts.
Gasoil exports hit record high volumes in March and April as refineries grappled with domestic oversupply and muted consumption.
The fuel is used in the industrial and heavy transport sectors. Demand has taken a hit in recent years, given stagnation in the manufacturing sector amid China's transition towards more service-sector-led economic growth.
In April alone, gasoil apparent demand tumbled 8.8% from a year ago, signaling the eighth consecutive month of decline.
Apparent demand for gasoline climbed to a record high of 2.89 million b/d in April, up 7% from a year earlier, according to S&P Global Platts calculations. The growth in the apparent demand figure was due to an 8.8% boost in domestic production, which more than offset a 35.5% rise in exports.
So far this year, gasoline apparent demand in China has increased by 7.9% to an average 2.83 million b/d.
Passenger vehicle sales rose 6.1% from January to April this year, with SUV sales surging 46.3%. New tax incentives introduced late last year to encourage small car ownership likely contributed to higher growth. In contrast, passenger vehicle sales rose just 2.8% in the first four months of 2015.
Platts China Oil Analytics forecasts a gasoline apparent demand rise of 6.4% in 2016, but notes that rising oil prices could limit growth in gasoline consumption this year.
China's fuel oil apparent demand in April shrank by 35.4% on a year-over-year basis to 672,000 b/d. The country's fuel oil consumption has fallen since late 2015, following the government's move to allow more independent refiners to import crude oil.
Prior to this, such refiners had limited access to crude oil and therefore tended to import fuel oil as their main processing feedstock. However, since the second half of 2015, Beijing has approved more than 1 million b/d of crude oil import quotas for independent refiners.
With fuel oil not as popular with refiners as processing feedstock, consumption is mainly focused on the bunker market. Fuel oil apparent demand this year has dived 19% year on year to 705,000 b/d.
In contrast, independent refiners' appetite for crude oil has surged significantly in 2016.
China's crude oil imports over the first three months of this year have increased 10.9% to an average 7.49 million b/d, with at least three-quarters of the growth attributed to independent refiners. Consequently, fuel oil imports into China have fallen 40% over January to April to 286,000 b/d.
Month-to-month demand in China is generally viewed to be subjected to short-term anomalies which are of interest and important to note, but 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. ■