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China Apparent Oil Demand Inched up 1% Year over Year in October: Platts China Oil Analytics


Year-to-Date Apparent Demand Contracted 1.4%


Singapore - December 28, 2016


China's apparent oil demand in October 2016 edged up by 1.1% from the same month last year to 11.12 million barrels per day (b/d), according to an analysis of Chinese government data by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets.


Refinery throughput in October averaged 11.13 million b/d, data from China’s National Bureau of Statistics (NBS) showed. This was up 6% on a year-over-year basis and up 4% versus September. Refinery runs in October continued climbing from September given China’s oil demand tends to peak in the fourth quarter every year.


However China became a net exporter of key oil products for the first time in October, with average net exports of 4,000 b/d during the month. Total exports were 858,000 b/d, surging 55.8% year on year. They outweighed total imports of 854,000 b/d, which fell 19.2% year on year, data from the General Administration of Customs showed.


Subtracting net exports from refinery runs, apparent oil demand in October averaged 11.12 million b/d, which was 1.1% higher than the same month last year. This was the first positive year-on-year growth recorded since June. This brings overall apparent oil demand over January to October to an average 11.04 million b/d, which is a contraction of 1.4% from the same time in 2015.


However given that some refinery output is likely not captured by government data, refinery runs were likely higher than reported by the NBS. Platts China Oil Analytics estimates that China’s refinery runs in October were 11.23 million b/d, which means apparent demand likely averaged 11.2 million b/d, 1.8% up from October last year.


Platts China Oil Analytics estimates that gasoline apparent demand in October averaged 2.88 million b/d, a 7.1% increase year on year while gasoil apparent demand rose 3.2% over the same period to 3.48 million b/d. Fuel oil apparent demand slumped 23.3% to 620,000 b/d, a continued trend since the second half of last year as independent refiners have received crude oil import rights, prompting them to cut back on their demand for fuel oil as a processing feedstock.


Going into the end of the year, gasoil demand in China appears to have strengthened in some parts particularly for lower pour point diesel in the north as the weather gets colder in winter. The government has poured more investment into infrastructure while there are indications that construction activity has ticked up.


Exports of transport fuels are likely to remain high until the end of the year although refiners have typically started to build gasoil stocks in December for the Lunar New Year the following year.


“Gasoil exports will remain strong in November and December but are unlikely to hit the record high level seen in September when outflows reached nearly 400,000 b/d,” said Song Yen Ling, senior analyst with Platts China Oil Analytics.


Gasoline exports in November are likely to have strengthened to 270,000 b/d from 240,000 b/d in October due to higher exports by the country’s independent refiners. Platts COA estimates that these refiners exported at least 150,000 mt of gasoline in November alone, roughly triple the volume in prior months.


MONTHLY CHINA OIL DATA IN '000 B/D


Oct '16 Oct '15 % Chg Sep '16 Aug'16 Jul '16 Jun '16
Net crude imports 6,739 6,231 8.2 7,973 7,715 7,287 7,447
Crude production 3,795 4,311 -12.0 3,904 3,889 3,964 4,051
Apparent demand 11,121 10,998 1.1 10,852 10,754 10,559 11,542

Sources: China's General Administration of Customs, National Bureau of Statistics, S&P Global Platts


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.


*S&P Global 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 NBS and Chinese customs. S&P Global 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.


In view of some significant shifts in Chinese consumption and trade patterns in recent years, S&P Global Platts has revised its methodology starting July 2015 to include production and net imports of liquefied petroleum gas (LPG), as well as imports of petroleum bitumen blend, a popular imported feedstock for China's teapot refineries.


S&P Global Platts has also refined its calculation of exports of jet fuel and fuel oil to exclude international marine bunker sales and aviation fuel delivered to international flights. This also impacts net imports, and hence apparent demand calculations.


All historical figures used for comparison have also been calculated using the new methodology to ensure consistency.


S&P Global Platts aims to release 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 S&P Global Platts. Note: S&P Global 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 S&P Global Platts website at www.platts.com. For Chinese-language information on oil and the energy and metals markets, visit http://www.platts.cn/.



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