China's implied oil demand in August slipped to the lowest rate this year as plant maintenances and accidents cut into refinery production, but on a year-on-year basis expanded 7.8 per cent, Reuters calculations based on preliminary government data show.
Fuel consumption in the world's No. 2 consumer has been losing steam since May, with growth easing off the double-digit expansion seen since last year as a result of climbing crude costs that have squeezed refining margins and as Beijing's credit tightening moves cut into fuel spending.
But despite the easing growth, China would still make up some 46 per cent of the world's incremental oil demand this year, according to an estimate by the International Energy Agency last month.
Implied demand — crude throughput plus net imports of refined oil products — was about 8.94 million barrels per day, up 7.8 per cent from August 2010, but dipped to the lowest rate so far this year. The calculations do not include inventory changes that the Chinese government rarely publishes.
"Oil demand growth from the coastal area has slowed but that of the central and western parts of the country is picking up more rapidly," said Dai Jiaquan, an oil market researcher with CNPC, parent of PetroChina.
So on a net basis, demand growth is still largely on track for an annual growth of about 6 per cent for the whole of 2011 as CNPC forecast at the beginning of the year, said Dai.
Economic activities in the inland regions were picking up due to lots of infrastructure, mining works and as many factories were relocated from the over-crowded and polluted east.
Macro data released on Friday suggested economic growth continued to ease in August, but domestic demand held up relatively well, soothing long-running investor fear of a hard landing in the world's second-largest economy.
Car sales in China, the world's largest auto market, rose 7.3 per cent in August from a year earlier, rebounding steadily from a decline in May, and the uptrend is expected to extend into September and October the traditional peak auto-selling season, a trend set to bolster China's gasoline use.
Trade data released yesterday also showed China's August export rose by a stronger-than-expected 24.5 per cent.
Refinery production curbs was a key factor behind the dip in apparent demand for August, as plants underwent overhauls and several refinery accidents further cut output.
Refinery throughput rose 4.5 per cent last month over the same month in 2010, one of the slowest growth in nearly two years and on a daily basis the processing rate was the second-lowest this year.
But industry officials expect demand to hold steady or pick up in the coming months, as several new refining facilities start on line and as plants wind up maintenances.
Seasonally, Chinese fuel demand should also accelerate from September as fishing ban ends, autumn harvest begins and builders resume normal constructions works after rainy season ends.