Jul 24 2012
China's apparent oil demand* fell for the first time in three years in June, dropping 1.9% year on year to 36.84 million metric tons (mt), or an average 9.0 million barrels b/d, a just-released Platts analysis of recent Chinese government data showed.
The 178,400-b/d fall from June 2011's apparent demand of 9.18 million b/d was the first contraction since a 2% drop in the first quarter of 2009 in the wake of the global financial crisis. On a daily basis, apparent oil demand last month was the lowest since the 8.95 million b/d seen in September last year.
Refinery runs in June fell 0.6% year on year to 35.98 million mt, or 8.79 million b/d, while net oil product imports dropped nearly 37% year on year to 860,000 mt.
"Industry sources we've spoken to have been expecting this drop to come sooner or later," said Song Yen Ling, Platts senior writer for China. "You can't keep watching the engines go slower and slower and not expect to see a drop in the fuel that's needed."
China's second quarter gross domestic product (GDP) growth was 7.6%, the lowest in over three years and down from first quarter growth of 8.1%. Year on year, industrial output growth was 9.5%, compared with 12.1% in the last 12 months. Electricity output fell 0.9% year on year.
In the past year, China's economy has been hit by dwindling export demand from Europe and the U.S., and domestic consumption has been insufficient to take up the slack.
In May, China's apparent oil demand growth rose 0.5% year-on-year to 9.39 million b/d, while April demand edged up 0.3% year-on-year to 9.35 million b/d.
June's drop, though, outweighed the previous two months' gains, bringing apparent oil demand for the second quarter to 9.25 million b/d, a year on year contraction of 0.4% from the 9.29 million b/d seen in the second quarter of 2011.
In the first half of the year, overall apparent oil demand averaged 9.45 million b/d, up 1% year on year.
China's economic growth has slowed for six consecutive quarters and downward pressure on growth still remains in the near term, HSBC said in a report earlier in the month.
"In the second half of the year it's going to be a tussle between the slowing economy and the government's efforts to get things back on track," Senior Writer Song said.
Analysts have previously told Platts that the government still has room to implement more monetary and fiscal measures to boost growth, and many still expect a rebound in growth in what remains of the year.
The People's Bank of China cut interest rates in early July, the second time in a month, in an effort to increase lending in the system. Signs that the stimulation efforts might be working came with a doubling of new loans from China's four biggest banks to ¥50 billion ($7.9 billion) in the first half of July as compared with the first half of June.
MONTHLY TRADE DATA IN MILLION METRIC TONS:
*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 National Bureau of Statistics and Chinese customs. 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.
Platts releases 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 Platts.
For more information on crude oil, visit the 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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SOURCE Platts