China's apparent oil demand in May reached 39.4 million mt or an average of 9.31 million b/d, which was 8% higher year on year, as state-owned enterprises continued to crank up output to supply local markets, according to a Platts analysis based on recent statistics released by the government.
Still, May's apparent oil demand was lower than April's oil demand at 9.37 million b/d and it was also the second straight month with a demand growth of under 10%.
China does not release official oil demand statistics. Platts calculates the country's oil demand based on official data on refiners' crude throughput and net oil product imports.
Chinese refiners processed a combined 38.47 million mt of crude oil in May, or an average of 9.1 million b/d, which represented a growth of 7.5% year on year.
Tasked by the central government to maintain adequate supplies of refined products in the local markets, domestic refineries continued to run at a breakneck pace last month in a bid to prevent any oil shortages in the country.
Yet, May's throughput was only marginally higher than April's crude runs at 9.09 million b/d.
With China refineries experiencing very low or negative margins, the Chinese companies are not motivated to process more crude to meet the potential diesel demand surge, industry consultancy FACTS Global Energy said in a brief earlier this month.
In the meantime, net product imports reached only 930,000 mt last month, or an average of 0.21 million b/d. Net imports in May were the lowest so far this year as Chinese companies' appetite for imports shrank due to high prices in the global markets.
According to an estimate released earlier this month by the National Development and Reform Commission, China's apparent consumption of refined products in May grew 5.2% year on year to 20.19 million mt, but fell 28,000 mt from April.
Coupled with increased production, the fall in consumption helped to boost inventories, and oil product stocks at end of last month were 1 million mt more than a year ago, the country's top economic planning agency said in its monthly industry report.
In May, NDRC reported that apparent consumption of oil products in April grew at a faster pace of 8.3% year on year to 20.4 million mt. End April, oil product inventories were 450,000 mt more than a year earlier.
In a separate report earlier this month, the NDRC said China's state-owned oil majors Sinopec and PetroChina held in storage by late May more than 13 million mt of refined products, a level which the NDRC termed as a "reasonable level."
"[In May,] crude inventories fell by 3.5%, product stocks increased by 2.6%, highlighting slightly slower [oil demand] growth than the apparent consumption suggests due to stockbuilding," said Barclays Capital in a research note on Tuesday.
