OREANDA-NEWS. December 24, 2013. Net product imports of 150 kb/d were also lower compared with last year. With crude imports at 5.75 mb/d in November, China’s crude inventories likely stayed at elevated levels. Product stocks, on the other hand, likely trended down by the end of November.

China’s implied November oil demand gained slightly from October, rising to 9.95 mb/d, but fell 5% y/y from a high base. Throughput of 9.8 mb/d was up slightly m/m, but down from 10.15 mb/d a year earlier, according to Barclays Research.

Net product imports of 150 kb/d were also lower compared with last year. With crude imports at 5.75 mb/d in November, China’s crude inventories likely stayed at elevated levels. Product stocks, on the other hand, likely trended down by the end of November. YTD China’s oil demand reached 9.8 mb/d, and YTD growth has retreated to 3.1% y/y from last month’s 4.4%.

Petchem production was still robust, with ethylene production up 15.4% y/y.

Qingdao pipeline blast

While runs continued to improve, the pace of the recovery was still slow. One reason likely was subdued economic activity in China, as both industrial production and power generation registered slower y/y growth in November compared with October. But there were one-off factors as well. The 22 November pipeline blast in Qingdao forced Sinopec to cut runs at the Qingdao, Qilu and Jinan refineries for days (a combined capacity of 520 kb/d) and suspend crude unloading at the port (Reuters). The 400 kb/d Maoming refinery was also shut for turnaround for much of this month. While China is not short on refining capacity nation-wide, the blast still disrupted operations and that was likely reflected in the data.

With 2012 demand growth concentrated in Q4, comparisons will remain difficult, and y/y growth could be modest given sluggish economic growth. However, demand is poised to rise from current levels on a m/m basis due to the end of turnaround, the startup of new capacity and the need to restock products. The blast already tightened Chinese market balances, especially for diesel, and Sinopec is likely to cut back on diesel and jet exports from the Qingdao refinery for the rest of the year (Reuters). Refiners have worked down diesel stocks consistently since June. Now, with the market tighter and margins consistent, they have an incentive to raise runs to build some cover. The startup of Quanzhou and Sichuan refineries in December is another reason that runs should rise moderately.