Chinese implied demand reached 12.34 mb/d in March, plummeting sequentially following the Lunar New Year but essentially flat y/y. The distortions associated with the Lunar New Year holiday and data publication suggest that Q1 19 data are a better reflection of demand trends, with demand averaging 12.86 mb/d (+0.20 mb/d, +1.6%). Actual demand in Q1 19 averaged 12.59 mb/d, as refiners tend to destock, up y/y by 0.22 mb/d.
Apparent gasoline demand reached 3.38 mb/d in March, 0.16 mb/d (5%) higher y/y, bringing Q1 19 demand to 3.52 mb/d (+79 thousand b/d y/y) as warm weather supported driving during the Lunar New Year, despite ongoing declines in car sales.
Chinese apparent diesel demand reached 3.34 mb/d in March (-0.26 mb/d y/y). Yet despite export-oriented refiners switching yields to diesel, domestic production fell and exports surged. Demand is set to recover in the coming months as infrastructure investment picks up.
China’s crude imports in March fell to 9.29 mb/d, returning to October 2018 levels (before Chinese arrivals began exceeding 10 mb/d). They are expected to remain subdued through peak maintenance in Q2 19 before picking up later in the year.
China was a net product exporter in March, as outflows reached 1.76 mb/d, topping last March’s record highs for both gasoline and diesel. Gasoline exports will be muted in April due to quotas constraints. Imports were also lower y/y, at 1.57 mb/d, despite a strong uptick in naphtha buying.
Crude production in March reached 3.91 mb/d, up y/y by 40 thousand b/d as domestic production starts to stabilise following the majors’ higher Capex pledges.