--- SEARCH ---
WEATHER
CHINA
INTERNATIONAL
BUSINESS
CULTURE
GOVERNMENT
SCI-TECH
ENVIRONMENT
LIFE
PEOPLE
TRAVEL
WEEKLY REVIEW
Learning Chinese
Learn to Cook Chinese Dishes
Exchange Rates
Hotel Service
China Calendar
Trade & Foreign Investment

Hot Links
China Development Gateway
Chinese Embassies

Oil Products Expected to Continue Momentum

The consumption of oil products is expected to continue strongly in the second half of this year, despite the government's moves to cool down the economy, analysts say.

Full-year demands for refined oil products - including gasoline, diesel and kerosene - will grow by more than 10 percent on year to over 146 million tons, making China one of the most dynamic markets in the world, analysts with both China National Petroleum Corp and brokerages say.

The estimated growth rate is higher than the 8.2 percent in 2003, according to Gong Jingshuan, an expert with the consultant institute of China National Petroleum Corp, the nation's largest oil producer.

The strong demand, especially driven by surging consumption from electricity and transportation sectors, is making refineries run almost at full capacity to keep up with the demand.

Crude oil in refineries is likely to increase up to 270 million tons by the year's end, representing a record 12 percent growth over 2003.

The estimated crude run is equivalent to the original production target that China's refiners set for 2005.

In the first five months, the consumption of refined oil products, such as gasoline, diesel and kerosene, all surged by more than 20 percent year-on-year.

Gasoline consumption increased by 21 percent to 19.5 million tons during the period. Diesel and kerosene both surged by 25 percent to 41.4 million tons and 4.3 million tons.

The robust demand growth has happened on the back of China's roaring economy with rampant production expansion in energy-intensive industries, such as steel, electricity, cement, chemicals and automobile.

In particular, widespread power shortages have forced many factories to buy diesel-fueled generators to produce electricity. This has made diesel consumption and imports surge, making China a net importer of diesel for the first time since 1998.

"The power shortage, the buying spree in cars and the bottleneck in transportation have become major forces driving up oil consumption," said Liu Gu, an analyst with Guotai Jun'an Securities (Hong Kong).

But analysts said they do not expect the 20 percent growth rate will continue.

They said the growth in the first five months has been exaggerated since it is based on the low figures of the same period of last year when the SARS (severe acute respiratory syndrome) outbreak hit oil consumption badly.

The government's move to rein in some fevered industries will leave its mark on oil consumption. But it is by no means a sharp turnabout of the market, since the industrial production growth remains strong and electricity shortages will grow worse in following months, they said.

The analysts expect demand for oil will grow about 10 percent in the second half.

"The consumption will be consistent throughout the year," said Gong of China National Petroleum Corp. "The impact of the government's macroeconomic control is limited."

Diesel consumption dropped last month as an annual fishing ban on China's coastlines to conserve marine life shrank the demand.

Refiners are increasing their exports to cut the supply so as to deal with seasonal demand falls.

But Gong expected that the demand will pick up in the third quarter because the power consumption peaks with more use of air conditioners.

The demand growth will further grow in October during the harvest season, Gong added.

To keep up with the strong consumption, Chinese refineries are running at full operation to keep the crude oil processing volume high.

Sinopec, Asia's largest refiner, increased its crude run target to 12.1 million tons for July, from 11.6 million tons in June.

In the first five months, China's refineries processed a record 111.7 million tons of crude oil, rising 17.3 percent year-on-year.

Gong said the crude run in the third quarter will reach 66 to 67 million tons. Full-year volume will increase to 270 million tons.

Last year, China processed 242.6 million tons of crude, up 10.8 percent from the previous year.

To meet the robust consumption, China's refineries are expanding their capacity. Sinopec, for instance, plans to increase its capacity to 200 million tons by 2010 from 140 million tons at present.

(China Daily July 12, 2004)

Tianfa Gets Licence to Import Oil Products
China's Oil Imports May Reach 120 Million Tons in 2004
Print This Page
|
Email This Page
About Us SiteMap Feedback
Copyright © China Internet Information Center. All Rights Reserved
E-mail: webmaster@china.org.cn Tel: 86-10-68326688