Based on preliminary data, China’s crude imports jumped 18.5% YoY in February to 23.64mmt, or +14.4% in mmb/d terms to 5.91mmb/d, allowing for the leap year impact. With domestic crude production seen essentially flat, most of the increase in China’s oil consumption will be by way of imports. The IEA currently forecasts China’s oil demand to grow at 4.0% for 2012 to 9.9mmb/d YoY, with imports rising 6.3% YoY. Against that background, the 14.4% increase in crude imports for February looks bullish. However, monthly YoY data are volatile. New Year falling in January (rather than February) might also have skewed the comparison.
Chinese demand is calculated either as the sum of domestic crude production plus net crude and product imports (crude side) or as the sum of refinery throughput plus net product imports (refinery side). Again, based on preliminary data, those calculations indicate that YoY demand for February rose 8.2% YoY to 10.4mmb/d (crude side), or 2.8% to 9.7mmb/d (refinery side). Crude side calculations typically, but not always, yield higher results than the refinery side calculation. The difference is often attributed to inventory build (changes in inventory are not formally reported). Other explanations include barrels missed in the refinery side calculation from gains on refinery processing or the difficulty in collecting data from the semi-official ‘tea-kettle’ refineries.
Average YoY demand growth for January and February indicates demand grew 4.5-5.2%, we calculate, higher than the IEA’s growth estimate with absolute demand either 0.3mmb/d less or 0.1mmb/d higher than the IEA’s absolute estimate for oil demand in China in 2012, depending on the calculation basis. Chinese demand might yet prove stronger than generally forecast, but one month’s worth of above average import data does not make the case, in our view.