Chinese implied demand likely averaged 12.81 mb/d in January, rising y/y by 0.39 mb/d from a low base as the Lunar New Year fell in January last year vs February this year. Actual demand (adjusted for stock changes) was likely lower than implied demand suggests given seasonal stock builds, but it was still higher y/y by 0.30–0.40 mb/d.
We estimate that apparent gasoline demand reached 3.44 mb/d in January, lower y/y by a modest 16 thousand b/d. February consumption will be supported by driving during the Lunar New Year, but with plummeting car sales and rising concerns about personal income growth due to the economic deceleration, gasoline demand growth is expected to slow in 2019.
Apparent diesel demand rose y/y by 94 thousand b/d to 3.84 mb/d on our estimates, but infrastructure activities eased. Smog-related industrial curtailments and limitations on transporting hazardous materials during Chinese New Year are weighing on February demand.
China’s January crude imports stayed buoyant at 10.06 mb/d, surging y/y (+0.46 mb/d) as new refiners imported crude, teapots continued to source barrels, and the majors stockpiled ahead of the Chinese New Year. Imports are likely to slow in Q2 19 due to refinery works.
China’s net product imports reached 0.44 mb/d in January versus 0.85 mb/d net imports in January 2018, as exports continued to remain strong in January after the government’s last-minute round of export quotas while imports slumped.
China’s domestic crude output likely stayed above 3.80 mb/d (+39 thousand b/d y/y) in January, as the majors are pledging higher capex to ramp up production in 2019.