China's apparent oil demand* in March rose 0.5% year over year to 41.55 million metric tons (mt) or an average 9.83 million barrels per day (b/d), a just-released Platts analysis of Chinese government data showed. The growth in apparent oil demand last month is significantly less than in previous years, when it averaged 1.9% in March 2013 and 4.2% in March 2012.

China’s refinery crude throughput volumes last month rose 2.6% to 9.91 million b/d versus a year ago, according to the latest data from China’s National Bureau of Statistics.

Oil product exports rose 3.4% year over year to 2.74 million mt in March, while imports of oil products slumped more than 24% on an annual basis to 2.37 million mt, a 19-month low, according to China’s General Administration of Customs data released April 10. This made China a net exporter of oil products for the first time since early 2010, at 370,000 mt for the month. This compared with net imports of oil products of 480,000 mt in March 2013.

“The net export of oil products is evidence that China is now facing a period of overcapacity as oil product supply outpaces domestic demand,” said Song Yen Ling, Platts senior writer for China. “Refiners are coping by sending more oil products overseas, as well as lowering their run rates.”

The higher oil products exports came amid reports of notable inventory build of gasoil, gasoline and jet/kerosene and weaker-than-expected domestic oil consumption in the first quarter (Q1) of the year.

China’s Q1 apparent oil demand slid 0.6% versus the same period a year ago to an average 10 million b/d, marking the first contraction in Q1 apparent oil demand since 2008. The decline in demand followed a slowdown in China’s gross domestic product (GDP) growth from 7.7% in the fourth quarter of 2013 to 7.4% in Q1 2014.

Within individual oil products markets, apparent demand for gasoil in March fell an annual 0.8% to 3.43 million b/d. Net exports fell 15% from a year earlier to 340,000 mt and domestic production declined 1.2% to 14.62 million mt.

Apparent demand for gasoline continued robust last month, surging 12.2% year over year to 2.41 million b/d, supported by expansion in automobile sales. Domestic output by refiners rose 11.8% from March 2013 to 9.33 million mt, while net exports rose 5.9% to 540,000 mt.

Apparent demand for fuel oil moved in the opposite direction, sliding 7.7% year over year to 637,000 b/d, on the back of a 34.5% decrease in net imports to 720,000 mt. Domestic output rose more than 5% from a year ago to 2.39 million mt. The lower demand was due to reduced appetite by China’s independent refiners, known as “teapots” and which use imported fuel oil as a major cracking feedstock. The teapot refiners have reduced their utilization in recent months on poorer demand and in response to increased access to crude oil, an alternate feedstock.

MONTHLY TRADE DATA:

  

	Mar '14	Mar '13	% Chg	Feb '14	Jan '14	Dec '13	Nov '13
Net crude imports (million mt)	23.52	22.78	+3.2	22.88	28.07	26.26	23.46
Crude production (million mt)	17.64	17.66	-0.1	16.11	17.58	17.90	17.28
Apparent demand* (million mt)	41.55	41.34	+0.5	40.56	40.11	42.76	40.88
Apparent demand* ('000 b/d)	9,825	9,775	+0.5	10,618	9,484	10,111	9,988

Sources: China’s General Administration of Customs, National Bureau of Statistics, Platts

Month-to-month demand in China is generally viewed as subject to short-term anomalies which are of interest and important to note, but which 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.

*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 (NBS) 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.
Source: Platts