Platts: China's Oil Demand Dips to Lowest in 10 Months

China's apparent oil demand was 38.02 million metric tons (mt) in August, or an average of 8.98 million barrels per day (bpd), the lowest level since October 2010, according to a Platts analysis based on statistics recently released by the Chinese government. But on a year-over-year basis, the August rate was up seven percent.

This marks the first time in 10 months that apparent oil demand has dipped below nine million bpd and reflects a softening in refined product consumption, compounded by a shrinking of crude oil use due to refinery repairs and incidents. The last time China's apparent oil demand was less than nine million bpd was in October 2010, when it reached 8.95 million bpd.

"The biggest contributor to the pullback in apparent oil demand in August was low crude throughput at refineries during the month," said Calvin Lee, Platts senior writer, China. "In addition, the growth momentum in domestic oil product consumption appears to be slowing, adding further drag to overall demand."

In August, though China's refinery crude throughput climbed 5.9% year on year to 36.78 million mt, or an average of 8.7 million bpd, the daily refinery run rate was just marginally more than the year's lowest crude processing rate of 8.69 million bpd in June.

Crude runs were curtailed last month, with several refineries cutting back production due to scheduled maintenance and an unplanned shutdown at PetroChina's Dalian refinery in northeast China following two separate incidents. The Dalian refinery produces 20.5 million metric tons per year, or 411,685 barrels per day.

During August, the country imported 3.41 million mt of refined products, up 33.2% from this same time a year ago. Oil product exports showed a 4.8% climb year on year to 2.17 million metric tons.

Meanwhile, net product imports for August, at 1.24 million mt or 290,000 bpd, were both 53% greater than those of August 2010 and 55% more than the net product imports in July of 800,000 mt or 180,000 bpd.

Still, the growth momentum in local oil product consumption appeared to be slowing, with usage of gasoline, diesel and jet fuel slipping in August to 19.43 million mt from 20.99 million mt in July, according to recent data published by the country's economic planning agency, the National Development and Reform Commission (NDRC).

The NDRC data showed that gasoline consumption during August grew 4.6% year over year, while diesel demand increased 1.2% from the prior year. The agency didn't provide actual consumption figures.

In comparison, diesel consumption expanded by 5.9% year on year in the first seven months of 2011 to 87.81 million metric tons. Gasoline demand increased 8.1% to 41.54 million mt during the January-July period.

"Some analysts view the set of data in August as clear signals of a slowdown," said Lee. "Several analysts have even predicted that China's oil demand will decelerate further in the third and fourth quarters due to a combination of weak economic outlook and a high base of comparison for the second half of 2010."