China oil product imports fall, growth in demand eases

Beijing, March 22 | Updated: Mar 23 2005, 05:30am hrs
Chinese oil product imports slumped in February as local refiners churned out more supply and a major holiday trimmed usage, while broader data showed underlying demand growing at a more measured pace.

Imports of key products such as diesel and fuel oil into the world's second-biggest oil user tumbled, data from the General Administration of Customs showed, although record-high refining rates were seen topping up inventories.

The trade figures, combined with domestic refinery output data, implied oil demand growth of around 5% from the previous year, according to Reuters calculations based on core oil products including gasoline, diesel, kerosene and fuel oil.

That is a marginal decline from January's 6% growth rate but a drop from 2004's double-digit surge in demand. The figures exclude liquefied petroleum gas (LPG) and naphtha, as refinery output data for these products were not available.

Economic cooling measures and an easing electricity supply crunch should help rein in demand that surged by more than 15% last year, but analysts are watching for any upside surprises to a consensus forecast of 8% growth.

(Oil) demand overall remains strong, said Victor Shum at consultants Purvin & Gertz in Singapore. China essentially shuts down for two weeks over the new year, which explains the fall in product imports.

China's Lunar New Year, when many factories and offices close, fell in February this year but in January last year.

Last year's demand growth was phenomenal, and no one really expects that to continue, Shum added.

But economic data so far this year shows an expansion still in full swing. Fixed-asset investment and industrial output both grew by a higher-than-expected rate in the year through January-February, at 24.5% and 16.9%, respectively.

The customs data also confirmed a rebound in crude oil imports, with net imports jumping to 10.3 million tonnes (2.7 million barrels per day) versus 7.3 million tonnes (1.7 million bpd) in January, the lowest figure in 14 months.