China's apparent oil demand rose just 0.5 percent year on year in May to 39.72 million metric tons (mt), or an average 9.39 million barrels per day (bpd), a just-released Platts analysis of recent Chinese government data showed.
Apparent oil demand in May was the second lowest so far this year after April, when demand rose 0.3 percent from a year ago to 38.32 million mt, or 9.36 million bpd.
"We're still seeing low refining rates due to maintenance, although those were offset by a big jump in net product imports," said Song Yen Ling, Platts senior writer for China. "Crude oil imports surged as well, but that was more likely due to state oil companies building up strategic reserves."
Refinery processing rates for May contracted 0.7 percent year on year to 38.33 million mt, or 9.06 million bpd, according to data from China's National Bureau of Statistics (NBS) released June 9. May's daily processing volume was the second lowest this year after a processing rate of 9.03 million bpd in April.
Meanwhile, the month's net oil product imports rose nearly 50 percent year on year to 1.39 million mt (320,148 bpd), although that was down from 323,680 bpd in April and 428,400 bpd in March.
Crude oil imports surged more than 18 percent on year to a record 25.48 million mt in May, breaching the 6-million-bpd mark at 6.02 million bpd, according to the country's customs data. Analysts have attributed the strong imports to stock-building efforts for both the strategic petroleum reserve and commercial storage.
China's apparent oil demand in the first five months of the year rose 2.6 percent compared to the same period in 2011, to 200.42 million mt or 9.66 million bpd.
Refinery runs rose 2.2 percent on year during the January-May period to 192.94 million mt or 9.3 million bpd, according to NBS data. Net oil product imports for the period rose over 14 percent on year to 7.48 million mt or 351,363 bpd.
Analysts 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 on Thursday. 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.
"It remains to be seen if this will be enough to get both oil demand growth and retail pricing reform back on track," said senior writer 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.
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