In China, oil demand growth in September 2014 remained solid. The structure of Chinese oil demand was characterized by high LPG demand for the petrochemical sector (growing by 19% y-o-y), rising gasoline consumption in the road transportation sector (growing by 18% y-o-y) and increasing jet fuel demand for the air transportation sector (growing by 13% y-o-y), as well as increasing diesel oil demand for the agriculture and fishing sectors (increasing by 4% y-o-y). On the other hand, the consumption of residual fuel oil declined by 10% y-o-y as a result of fuel substitution to natural gas and coal, mostly in the industrial sector.
According to statistics and analysis of the China Association of Automobile Manufacturers (CAAM), sales of passenger vehicles were up by around 1.7 million units, representing an increase of more than 6% y-o-y. However, going forward, the consumption of gasoline should be limited by measures geared towards increasing the quality of transportation fuels with the aim of lowering air pollution in major cities. Furthermore, the increasing number of natural gas fuelled vehicles and increasing efficiencies pose some additional downside factors for oil demand in the road transportation sector. Moreover, the penetration of natural gas and coal in the transportation, industrial and petrochemical sectors is projected to continue for the remainder of 2014 and is another downside factor for future oil demand in the country.
Looking forward, the outlook for 2015 remains relatively unchanged since last month, with similar factors pointing to the downside and mainly focused on economic uncertainties and the implementation of measures in order to limit transportation fuels consumption. On the other hand, the additional propylene dehydration plants which require propane as a feedstock and developments in refining capacity could, on the other hand, be considered factors that could push oil demand estimates higher. For 2014, Chinese oil demand is anticipated to grow by 0.34 mb/d, while oil demand in 2015 is projected to increase again by 0.31 mb/d.