China Crude Oil demand growth to reach 460 thousand b/d in 2013: Barclays Crude oil demand growth in China would reach an average 460 thousand b/d in 2013 as a result of healthy import growth, rise in domestic demand, product exports to regional consumption centres and a switch in appetite by teapot refineries from fuel oil to crude oil, stated London based Barclays. Chinese crude oil imports were pegged at 5.58 mb/d in December (increasing by 8% y/y). This extends the growth trajectory seen since October, with Q4 averaging a growth of 8% y/y, marking a steady recovery when compared to the 7% y/y average decline seen over August and September. Refinery runs also maintained a steady pace of growth in December (up 10% y/y) to a record 10.18 mb/d. The ramp up in run has been a result of several new refineries coming online over Q4, in particular the 200 thousand b/d PetroChina refinery in Sichuan and the 120 thousand b/d Shandong Dongming refinery. Overall, the increased runs and robust crude and product import numbers place Chinese oil demand in December at a record 10.56 mb/d (up y/y by 9%, 866 thousand b/d). The latest reading completes a strong fourth quarter of demand growth for China where the headline numbers averaged 10.2 mb/d, with growth during this period averaging 800 thousand b/d, 8%). These growth indications show a stark reversal when compared with the trend seen in Q3, and a close to four fold increase in growth rates when compared to the rest of the year where demand growth had averaged 235 thousand b/d (up 3% y/y). Finally, in terms of inventories, higher crude run requirements and relatively modest crude import growth have meant that Chinese commercial crude oil inventories fell by 3.62% (7.9 mb) m/m to 212 mb at the end of December. However, product inventories built up in December by 4% m/m. Gasoline inventories built the most, up by 8.5%, while gasoil stocks edged up by 2%. Kerosene inventories fell by 4% m/m, extending the constructive import readings for the product. The trade data continues to show a marked increase in Chinese exports of refined oil products in December, indicating that all of the increase in runs and crude imports cannot be proportionately linked to growth in domestic consumption. Chinese oil product exports seasonally increase in Q4, but this time the swing has been a lot more pronounced. The expansion in refining capacity is also coinciding with the country increasingly ramping up supplies of refined products to the regions’ key consumption centres. Preliminary indications suggest that the cold weather conditions in December have supported diesel demand in the country. Gasoline demand remains supported by structural growth factors as the per capita usage of automobiles continues to increase. Looking Along with an improvement in petrochemical demand, Barclays expects gasoline and diesel sales to support a healthy undercurrent of domestic consumption. Fuel oil demand is likely to face headwinds this year as teapot refineries expand and obtain crude oil import licenses, or merge with established parent companies and take advantage of their crude import contracts as feedstock. Teapot refinery run rates in the Shandong province have reduced their processing rates to 42% of their capacity as of 17 January (down by over 44% from a week earlier and the lowest level since August). While part of the reason for the decrease in run rates is to do with the increased flexibility in sourcing crude,part of it continues to be because of poor margins following the retail price cuts on 15 November 2012 for both gasoline and diesel.Crude oil demand growth in China would reach an average 460 thousand b/d in 2013 as a result of healthy import growth, rise in domestic demand, product exports to regional consumption centres and a switch in appetite by teapot refineries from fuel oil to crude oil, stated London based Barclays. Chinese crude oil imports were pegged at 5.58 mb/d in December (increasing by 8% y/y). This extends the growth trajectory seen since October, with Q4 averaging a growth of 8% y/y, marking a steady recovery when compared to the 7% y/y average decline seen over August and September. Refinery runs also maintained a steady pace of growth in December (up 10% y/y) to a record 10.18 mb/d. The ramp up in run has been a result of several new refineries coming online over Q4, in particular the 200 thousand b/d PetroChina refinery in Sichuan and the 120 thousand b/d Shandong Dongming refinery. Overall, the increased runs and robust crude and product import numbers place Chinese oil demand in December at a record 10.56 mb/d (up y/y by 9%, 866 thousand b/d). The latest reading completes a strong fourth quarter of demand growth for China where the headline numbers averaged 10.2 mb/d, with growth during this period averaging 800 thousand b/d, 8%). These growth indications show a stark reversal when compared with the trend seen in Q3, and a close to four fold increase in growth rates when compared to the rest of the year where demand growth had averaged 235 thousand b/d (up 3% y/y). Finally, in terms of inventories, higher crude run requirements and relatively modest crude import growth have meant that Chinese commercial crude oil inventories fell by 3.62% (7.9 mb) m/m to 212 mb at the end of December. However, product inventories built up in December by 4% m/m. Gasoline inventories built the most, up by 8.5%, while gasoil stocks edged up by 2%. Kerosene inventories fell by 4% m/m, extending the constructive import readings for the product. The trade data continues to show a marked increase in Chinese exports of refined oil products in December, indicating that all of the increase in runs and crude imports cannot be proportionately linked to growth in domestic consumption. Chinese oil product exports seasonally increase in Q4, but this time the swing has been a lot more pronounced. The expansion in refining capacity is also coinciding with the country increasingly ramping up supplies of refined products to the regions’ key consumption centres. Preliminary indications suggest that the cold weather conditions in December have supported diesel demand in the country. Gasoline demand remains supported by structural growth factors as the per capita usage of automobiles continues to increase. Looking Along with an improvement in petrochemical demand, Barclays expects gasoline and diesel sales to support a healthy undercurrent of domestic consumption. Fuel oil demand is likely to face headwinds this year as teapot refineries expand and obtain crude oil import licenses, or merge with established parent companies and take advantage of their crude import contracts as feedstock. Teapot refinery run rates in the Shandong province have reduced their processing rates to 42% of their capacity as of 17 January (down by over 44% from a week earlier and the lowest level since August). While part of the reason for the decrease in run rates is to do with the increased flexibility in sourcing crude,part of it continues to be because of poor margins following the retail price cuts on 15 November 2012 for both gasoline and diesel.

     Crude oil demand growth in China would reach an average 460 thousand b/d in 2013 as a result of healthy import growth, rise in domestic demand, product exports to regional consumption centres and a switch in appetite by teapot refineries from fuel oil to crude oil, stated London based Barclays.
     Chinese crude oil imports were pegged at 5.58 mb/d in December (increasing by 8% y/y). This extends the growth trajectory seen since October, with Q4 averaging a growth of 8% y/y, marking a steady recovery when compared to the 7% y/y average decline seen over August and September. Refinery runs also maintained a steady pace of growth in December (up 10% y/y) to a record 10.18 mb/d.
            The ramp up in run has been a result of several new refineries coming online over Q4, in particular the 200 thousand b/d PetroChina refinery in Sichuan and the 120 thousand b/d Shandong Dongming refinery.
Overall, the increased runs and robust crude and product import numbers place Chinese oil demand in December at a record 10.56 mb/d (up y/y by 9%, 866 thousand b/d). The latest reading completes a strong fourth quarter of demand growth for China where the headline numbers averaged 10.2 mb/d, with growth during this period averaging 800 thousand b/d, 8%).
        These growth indications show a stark reversal when compared with the trend seen in Q3, and a close to four fold increase in growth rates when compared to the rest of the year where demand growth had averaged 235 thousand b/d (up 3% y/y).
     Finally, in terms of inventories, higher crude run requirements and relatively modest crude import growth have meant that Chinese commercial crude oil inventories fell by 3.62% (7.9 mb) m/m to 212 mb at the end of December.
       However, product inventories built up in December by 4% m/m. Gasoline inventories built the most, up by 8.5%, while gasoil stocks edged up by 2%. Kerosene inventories fell by 4% m/m, extending the constructive import readings for the product. The trade data continues to show a marked increase in Chinese exports of refined oil products in December, indicating that all of the increase in runs and crude imports cannot be proportionately linked to growth in domestic consumption.
          Chinese oil product exports seasonally increase in Q4, but this time the swing has been a lot more pronounced. The expansion in refining capacity is also coinciding with the country increasingly ramping up supplies of refined products to the regions’ key consumption centres.
         Preliminary indications suggest that the cold weather conditions in December have supported diesel demand in the country. Gasoline demand remains supported by structural growth factors as the per capita usage of automobiles continues to increase. Looking
     Along with an improvement in petrochemical demand, Barclays expects gasoline and diesel sales to support a healthy undercurrent of domestic consumption. Fuel oil demand is likely to face headwinds this year as teapot refineries expand and obtain crude oil import licenses, or merge with established parent companies and take advantage of their crude import contracts as feedstock.
        Teapot refinery run rates in the Shandong province have reduced their processing rates to 42% of their capacity as of 17 January (down by over 44% from a week earlier and the lowest level since August). While part of the reason for the decrease in run rates is to do with the increased flexibility in sourcing crude,part of it continues to be because of poor margins following the retail price cuts on 15 November 2012 for both gasoline and diesel.