(EnergyAsia, June 27 2012, Wednesday) — In a clear sign of a slowing economy, China’s apparent oil demand rose just 0.5% year-on-year in May to 39.72 million metric tons (mt), or 9.39 million b/d, said US energy media Platts.
According to an analysis of Chinese government data, Platts said the country’s May oil demand was the second lowest so far this year after April, when demand rose 0.3% from a year ago to 38.32 million mt, or 9.36 million b/d.
“We’re still seeing low refining rates due to maintenance, although those were offset by a big jump in net product imports. Crude oil imports surged as well, but that was more likely due to state oil companies building up strategic reserves,” said Song Yen Ling, Platts senior writer for China.
Refinery processing rates contracted 0.7% year on year to 38.33 million mt, or 9.06 million b/d, according to data from China’s National Bureau of Statistics (NBS). May’s daily processing volume was the second lowest this year after a processing rate of 9.03 million b/d in April.
Meanwhile, China’s net oil product imports rose nearly 50% year on year to 1.39 million mt (320,148 b/d), although that was down from 323,680 b/d in April and 428,400 b/d in March.
Crude oil imports surged more than 18% on year to a record 25.48 million mt in May, breaching the six-million-b/d mark at 6.02 million b/d, according to official Customs data. Analysts have attributed the strong imports to stock-building efforts for both the strategic petroleum reserve and commercial storage.
For the year to May, Platts said China’s apparent oil demand rose 2.6% compared to the same period in 2011, to 200.42 million mt or 9.66 million b/d.
Refinery runs rose 2.2% on year during the January-May period to 192.94 million mt or 9.3 million b/d, according to NBS data. Net oil product imports for the period rose over 14% on year to 7.48 million mt or 351,363 b/d.
Platts said the relatively low demand growth seen over the last couple of months reflects China’s overall weak economic growth.
China’s manufacturing activity hit a seven-month low in June, according to HSBC. The bank’s preliminary purchasing managers index – a gauge of industrial and manufacturing activity – fell to 48.1 in June from 48.4 in May. A reading below 50 indicates a contraction.
But recent liquidity easing measures by the government could allay fears of an economic slowdown in China. These include a 25 basis point interest rate cut by the People’s Bank of China, approvals for new infrastructure projects and easing of bank reserve requirements, said Platts.
“It remains to be seen if this will be enough to get both oil demand growth and retail pricing reform back on track,” said Ms Song.
Analysts said in early June that China’s oil demand growth will likely ramp up in the second-half of the year relative to the first-half on the government’s stimulus measures and if oil prices continue easing.