Chinese oil product use expected to rise 10-13% in 4Q

China’s consumption of oil products is expected to increase 10-13% in the fourth quarter after sluggish demand in the first 9 months of this year, according to state media.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 29 -- China’s consumption of oil products is expected to increase 10-13% in the fourth quarter after sluggish demand in the first 9 months of this year, according to state media.

“Because of a strengthened trend of economic recovery, especially persistent strong car sales, demand for fuels recovered to some extent, though overall consumption was still lower than a year earlier due to weak diesel demand,” said Zhou Xian, head of the National Energy Administration’s general affairs department.

The year-on-year growth rates of energy production, transportation, and sales will continue to rise in the fourth quarter due to the low-base effect, Zhou told China’s official Economic Daily.

The apparent consumption of refined fuels will reach 53-54 million tonnes, or roughly 4.7 million b/d, in the fourth quarter, said Zhou, who added that in the first three quarters of 2009, China’s apparent consumption of refined fuels fell 3.2% from a year earlier to around 4.5 million b/d.

However, the news coincided with other reports that China's oil demand in September saw considerable growth in terms of both year-on-year and monthly rates, thanks mainly to the economic recovery.

The year-on-year growth of nationwide oil demand is estimated at 8% in September, in line with the country's 8.9% GDP growth in the third quarter, according to a spokesman of China National Petroleum Corp.

The increase in domestic oil demand is largely attributed to booming passenger vehicle sales which, according to the China Association of Automobile Manufacturers, reached 1.02 million units in September, up 18.27% month-on-month and 83.62% year-on-year.

Chinese drivers are said to be especially eager for cars with small engines, 1.4 l. or less, because they qualify for state subsidies. Overall vehicle sales, including trucks and buses, jumped 78%, to 1.33 million units.

Car sales aside, demand for oil products was up due to the beginning of the new school term, the resumption of fish farming in the East China Sea, and growing tourism before the National Day holiday occurred in September.

Demand for gasoline during the month of September grew 8% year-on-year while diesel demand rose by some 6.5% year-on-year, according to the CNPC spokesman. He said naphtha demand rose 20% in September 2009 over the previous year, while kerosine rose by 20% and LPG by 8% year on year.

Demand for heating oil is expected to increase with the onset of winter, while a further moderate increase is expected from car sales, which will see steady growth before the traditional Chinese New Year in late January.

Contact Eric Watkins at hippalus@yahoo.com.

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