Today's Trends: China Apparent Oil Demand Slows in July

China's "apparent oil demand" (production plus net imports) slowed in July, declining from June's record high of 36.74 million metric tons (mt) to 35.82 million mt or approximately 8.47 million b/d, according to Platts' analysis of official data from the People's Republic of China.

July demand is down 5.6 percent from June and is up only 2.7 percent from a year ago, a sharp drop off from the double-digit year-on-year gain reported for the prior month, Platts reports.

"The sharp drop in China's oil demand growth in July is a clear indication that Beijing's tightening policies are taking effect," said Mriganka Jaipuriyar, senior editor for Platts in Singapore. "With both industrial production and asset investment dropping in the month, it is not surprising that oil demand has slowed down too. Looking ahead, whether we actually see negative oil demand growth will depend on whether China decides to pursue its tighter policies or reverses them."

Historically, Chinese crude imports have been utilized as a proxy for its oil demand, a fair calculation given that the country's domestic production has been more or less stagnant. However, the country's crude imports alone are not enough to form the real picture of China's oil consumption/demand, as China's product exports have started to grow significantly and products imports decline, Platts said. That makes calculating the "apparent" or implied demand more important.

Chinese refiners boosted their combined crude throughput to 35.28 million mt or an average of 8.34 million b/d in July. This is down .2 percent from June's 35.35 million mt. But the throughput was up 6.55 percent from July 2009 and offset a 70 percent increase in net oil product imports over the same period to 540,000 mt in July 2010. The refiners produced a total 27.54 million mt of major oil products in July, up 7.86 percent year on year, according to data released earlier this month from China's National Bureau of Statistics.

Imports of oil products in July fell 22.28 percent year on year to 3.14 million mt and were down 13.74 percent from June's 3.64 million mt. Product exports, meanwhile, rose 16.6 percent year on year to 2.6 million mt and were up 15.5 percent from June's 2.25 million mt. Net product imports were down 61 percent from June.


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