China’s apparent oil demand contracted by 2.7 per cent in May 2016 from a year earlier to 10.88 million barrels per day (bpd), according to a just-released 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 May averaged 10.46 mbpd, data from the China’s National Bureau of Statistics (NBS) showed June 12. This was a 0.04 per cent decline year over year and a 4.3 per cent drop month over month.
However, net imports of key oil products slumped 41.4 per cent from a year earlier to an average 423,000 bpd in May, as exports of transport fuels climbed higher, data from China’s General Administration of Customs showed.
The contraction in oil demand in May represented the fourth consecutive month of negative growth and was due to declines in gasoil and fuel oil demand, amid slowing economic growth.
Over the first five months of 2016, apparent oil demand averaged 11.1 mbpd, down 0.8 per cent. In contrast, apparent oil demand had increased by 9.1 per cent during January-May 2015, when lower fuel prices incentivized end users to boost consumption.
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 per cent in the first quarter of this year, a decline from 6.8 per cent in the fourth quarter of 2015.
China’s 2016 apparent oil demand is forecast to grow by less than 2 per cent, according to Platts China Oil Analytics, an on-line platform for supply/demand and trade data, of S&P Global Platts.
Apparent demand for gasoil in China contracted by 13 per cent year over year in May and this was partly reflected in exports of the fuel hitting a new record high volume of 356,000 bpd during the month as refineries grappled with domestic oversupply and stagnant consumption levels.
The fuel is used in the industrial and heavy transport sectors. Demand has taken a hit in recent years on the slowdown in the manufacturing sector, amid China’s transition towards more service-sector-led economic growth.
