China's Oil Demand Reaches Records Despite Slowing Growth

China's apparent oil demand in December rose 0.7 percent year on year to 41.02 million metric ton (mt), or an average 9.69 million barrels per day (bpd), a Platts analysis of recent statistics released by the Chinese government showed.

"But even with that relatively slow rate of growth at the end of the year, the actual demand for December was the highest daily rate the country's oil demand has ever reached," said Calvin Lee, Platts Senior Writer for China.

Yet, the oil demand growth in December of 0.7 percent was the second time last year that the rate of increase was below 1 percent. On a quarterly basis, oil demand growth of 1.6 percent in the fourth quarter was the lowest among all four quarters in 2011.

The drop-off in oil demand growth in the second half of the year pulled the annual growth rate down to 6.1 percent in 2011, from 11.3 percent in 2010.

December's apparent oil demand was a tad more than the previous all-time high of 40.73 million mt, or 9.62 million bpd, recorded in the same month a year ago, when the country was besieged by a diesel shortage.

For the whole year, China's apparent oil demand was at 460.65 million mt, or an average 9.25 million bpd, 6.1 percent more than the previous year.

The 2011 figure was the highest-ever by the world's second largest oil consumer and was the first time that oil demand has breached 9 million bpd for a full year. The rate of increase in 2011, however, was lower than the 11.3 percent growth recorded in 2010.

As far as December, Lee said, "High crude throughput and strong net refined product imports continue to lift the apparent oil demand, outweighing the slower growth rates and the recent drop-offs in gasoline and diesel consumption."

In December, China's refineries processed 39.23 million mt of crude oil, or an average 9.28 million bpd, with throughput hitting an all-time high for the second consecutive month.

December's crude throughput was 1.3 percent higher compared with a year ago, and 0.3 percent more than November's throughput of 9.25 million bpd, which was the previous record high.

Chinese state-owned refiners have been ramping up production since October—when most of their plants returned online after completing scheduled turnarounds—to replenish refined product inventories, particularly for diesel.

Sinopec and PetroChina have said previously that their refineries have been running at full capacity since October amid earlier signs of tightening supply of diesel in certain parts of the country.

Meanwhile, refined products imports rose 2 percent year on year to 4.04 million mt in December, the highest volume in nearly 2 1/2 years. December's imports were also 20.6 percent more than the previous month.

In July 2009, oil product imports were also at 4.04 million mt.

Oil product exports in December were 19.1 percent higher year on year at 2.25 million mt.

Net product imports in December totaled 1.79 million mt—the highest in a year—a surprising figure considering that growth in gasoline and diesel consumption has waned in recent months according to earlier released data by the central government.