Chinese oil demand grew in June 2016 by around 0.24 mb/d, or 2% y-o-y, far lower than the average growth registered in 2015 of 6% y-o-y. Total consumption reached approximately 11.23 mb/d. Oil demand growth was mostly determined by ongoing increases in LPG usage in the petrochemical industry and jet/kerosene and gasoline consumption in the transportation sector, with both growing by around 12% and 3% y-o-y, respectively.
LPG demand growth continued its anticipated gains, recording an increase of around 0.26 mb/d y-o-y and bringing total consumption to approximately 1.5 mb/d, mainly as a result of startup and ramp-up operations in a number of propane dehydrogenation plants (PDH) around the country.
Jet/kerosene demand increased by around 77 tb/d, or 14% y-o-y, with total demand at approximately 0.65 mb/d. This increase is in line with the recent uptick in travel activities during the summer holidays.
Gasoline demand was higher compared with last year, rising by 78 tb/d y-o-y, according to statistics and analysis of the China Association of Automobile Manufacturers (CAAM). In June, sales of passenger cars reached 1.8 million units, higher by 18% from the level experienced in June 2015. For the first half of 2016, sales of passenger cars totaled 11 million units, higher by 9% y-o-y. As for the passenger cars by type, comparing with the same period of last year, SUVs continued to experience solid growth as sales increased by more than 44% y-o-y. MPVs also grew solidly, adding some 18%, compared with the same period in 2015. Diesel oil demand was lower y-o-y by around 0.20 mb/d, which equates to 5% y-o-y, as industrial activities appeared to be lower than in June 2015.
For 2017, as economic development in China is assumed to be at similar levels to 2016, oil demand growth is expected to remain within the 2016 range. On the other hand, the continuation of fuel quality programmes targeting fewer emissions, as well as ongoing fuel substitution with natural gas and coal, are assumed in the projections for 2017. In terms of products, gasoline and LPG are assumed to lead product growth in 2017 to fulfill the demand arising from ever growing vehicle sales and ongoing improvements in the petrochemical sector.
For 2016, China’s oil demand is anticipated to grow by around 0.28 mb/d y-o-y, while expectations for 2017 oil demand growth in China are in the range of 0.27 mb/d y-o-y.