(EnergyAsia, December 27 2011, Tuesday) — China’s apparent oil demand in November rose 2.6% year on year to 39.08 million metric tons (mt) or 9.54 million b/d – the second-highest daily rate recorded this year, according to an analysis by US energy media Platts.
This figure, which was just slightly less than February’s 9.58-million-b/d, was boosted by record-high refinery throughput as Chinese companies operated their plants at capacity to replenish depleting diesel stocks.
The November demand was also the third-highest according to Platts records, which date back to 2005. The two highest monthly data was December 2010’s 9.62-million-b/d and February 2011’s 9.58-million-b/d.
Calvin Lee, Platts senior writer for China, said:
“Local media have reported in recent weeks that widespread diesel shortages have once again affected the country, with long queues for limited supplies of diesel seen at retail stations in several provinces, prompting Beijing to call on the national oil companies to raise output.”
In November, Chinese refiners processed 37.87 million mt of crude, or an average 9.25 million b/d. This was 3.3% higher year on year, showed data from the country’s National Bureau of Statistics.
Daily refinery throughput reached an all-time high last month as the country’s two national oil companies – PetroChina and Sinopec – operated at full capacity after regular maintenance to replenish fast-depleting inventory, especially diesel.
Chinese companies produced 14.13 million mt of diesel in November, about 5.2% more than October. Diesel output in November increased for the second straight month, after it dipped in August and September.
The production increase, coupled by an easing in consumption of refined products following the end of seasonal peak demand, resulted in a build-up in refined product stocks for the first time in six months, according to the official Xinhua news agency.
Inventories of gasoline, diesel, and jet fuel climbed 3.6% month on month by end-November, rising for the first time since May, Xinhua said.
In November, China imported 4.8% less refined oil products at 3.35 million mt, compared with a year ago, while oil product exports increased 2.9% to 2.14 million mt.
Platt’s Mr Lee said: “The drop in imports is largely attributed to China reducing its reliance on imported diesel. Analysts say that there is a general shift by Chinese companies from importing diesel to importing crude oil to refine it into diesel themselves. Because retail prices are regulated by the government, refiners incur lower losses if they import crude to produce diesel compared with selling the higher priced imported diesel domestically.”
Platts said it expects China’s oil demand to remain strong in December.
The country’s leading economic planning agency, the National Development and Reform Commission, has instructed state-owned companies to ensure supply of coal, oil and natural gas during the upcoming winter-to-spring period, implying high refinery throughput in December.