China Oil Refining Rises at Slowest Pace in 8 Months

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By Bloomberg News
(c) 2010 Bloomberg News
Thursday, July 15, 2010; 12:00 AM

July 15 (Bloomberg) -- China's June crude-oil processing rose at the most gradual pace in eight months as the world's fastest-growing economy slowed, cutting demand for fuel.

Crude processing climbed 11 percent from a year earlier to 35.3 million metric tons in June, or about 8.64 million barrels a day, according to China Mainland Marketing Research Co. That's the slowest pace of growth since the 10 percent increase in October last year, according to the research company, which compiles data for the government.

Economic growth eased to 10.3 percent in the second quarter from 11.9 percent in the first, the National Bureau of Statistics said today, after the government took steps to prevent overheating. Chinese crude imports may decline as waning domestic energy demand reduces refining profits, said Wang Aochao, head of China energy research at UOB-Kay Hian Ltd.

"June oil processing will be the peak," Shanghai-based Wang said by telephone. "We'll see a fall in processing rates and fuel demand from July because margins and consumption are going down."

Industrial production, which affects diesel use by trucks that transport goods, gained a less-than-estimated 13.7 percent in June, the statistics bureau said. Sales of gasoline-powered passenger cars in China rose at the slowest pace in 15 months in June, official data showed.

Diesel output in June increased 11 percent to 13.3 million tons and gasoline production gained 3.7 percent to 6.48 million tons, according to Mainland Marketing.

Crude processing reached a daily record last month, surpassing the previous all-time high in May, today's data show. Refiners may turn to exports should domestic demand fall, Qiu Xiaofeng, chief oil analyst with China Merchants Securities Ltd., said by telephone from Shanghai.

Fuel oil output climbed 15 percent to 1.82 million tons last month, while kerosene production rose 12.2 percent to 1.46 million tons, Mainland Marketing said.

Natural gas output in June rose 5.8 percent to 7.1 billion cubic meters, according to the research company. First-half production gained 11 percent to 45.9 billion cubic meters.

Mainland Marketing didn't provide coal output figures in today's release.


© 2010 bloomberg.com

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