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China Oil Demand in August 2015

Source: OPEC 8/23/2015, Location: Asia

China’s oil demand came in stronger than initially expected in June with 0.49 mb/d growth y-o-y, which was higher than the average oil demand growth in 2014 of around 0.40 mb/d. Total consumption reached 10.90 mb/d, according to the Secretariat’s calculations.

Oil demand growth was mostly determined by increasing LPG usage in the petrochemical industry and gasoline in the transportation sector, with both growing by more than 13% and 8% y-o-y, respectively. LPG demand growth continued its anticipated gains, recording an increase of around 0.14 mb/d y-o-y, taking total consumption to approximately 1.2 mb/d. It was supported by a number of startups and ramp-up operations in a number of propane dehydrogenations plants (PDH) around the country.

Gasoline demand was higher in June compared with last year, rising by 0.21 mb/d y-o-y. According to statistics and analysis of the China Association of Automobile Manufacturers (CAAM), passenger car sales registered a decline of more than 3% y-o-y for the first time in the past couple of years. However, a strong rise in SUV sales, increasing by more than 38% compared with the same period last year, eased some of the downward pressure on car sales data. Diesel oil demand was also higher by around 0.17 mb/d, which equated to 5% y-o-y, as investment in infrastructure projects gave support to products’ growth.

Jet/kero demand fell for the first month since the beginning of 2015 by around 60 tb/d or more than 9% y-o-y, with total demand at around 0.57 mb/d. This fall is much in line with the recent slowdown in travel activities as Chinese authorities announced the first patient diagnosed with MERS in June. Fuel oil demand increased by around 30 tb/d, more than 5% y-o-y, despite the fact, that teapot refiners limited their fuel oil intake due to the introduction of quotas system capping demand for fuel oil.

For 2016, oil demand for the transportation and industrial sectors is projected to continue rising, along with passenger car sales. Slightly lower GDP growth compared with 2015, a continuation of fuel quality programs targeting fewer emissions, and the continuation of fuel substitution with natural gas and coal are factors to be watched. For 2015, China’s oil demand is anticipated to grow by around 0.36 mb/d, while the expectation for 2016 oil demand growth in China is in the range of 0.33 mb/d.

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