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China's Petroleum Market May Face More Pressure in Second Half 2005

Posted on: Monday, 8 August 2005, 12:00 CDT

Text of report in English by official Chinese news agency Xinhua (New China News Agency)

Beijing, 8 August: Although China's apparent consumption of petroleum had hardly increased in the first half of this year, its market demand for petroleum still kept rising, and the petroleum market might face more pressure, experts said Monday [8 August].

According to figures released by the economic and technological research centre of China National Petroleum Corp [CNPC], from January to May, China's total apparent consumption of petroleum reached 133.249m tons, a year-on-year increase of merely 0.11 per cent.

Apparent consumption refers to the output volume plus net import or minus net export, which doesn't reflect the change of inventories. When the stockpile drops, apparent consumption is less than the actual amount of consumption.

Gong Jinshuang, senior engineer of the economic and technological research centre of CNPC, said the growth rate of actual demand for petroleum remained at 5.6 per cent in the first six months, much higher than the apparent consumption, making the stockpiles of crude oil and finished oil products fall to a large extent.

Gong pointed out that several factors will continue to drive the demand for petroleum in the next six months. A high economic growth rate, the rising trend of fixed asset investment, and increasing added value of heavy industry and of some main chemical industrial products are among them.

Besides, the shortage of electricity due to the hot weather of the country in the third quarter also contributes to the hiking demand for petroleum.

Due to rocketing oil prices, the import of crude oil and finished oil products will decrease. The price gap between domestic and international processed oil products will lead to a drop in the output of oil products too. With limited resources, the growth rate of crude oil cannot reach a high level, he said.

These factors will increase pressure on the supply of petroleum in the second half of this year, said Gong.

He suggested that based on the expected supply and demand in the petroleum market, the government should keep the domestic petroleum market relatively stable by using macro-regulation measures such as pricing.

Source: BBC Monitoring Asia Pacific

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