BEIJING: China's implied oil demand inched up 0.3 percent in October from a year earlier, after dipping the previous month in the first yearly decline in 17 months, as refineries pumped more with the economy showing stronger signs of stabilising.
Official data over the past two days suggest China's economy has found its footing after a protracted slowdown, with factory activity growing faster than expected and a rebound in exports also stronger than the market had thought.
Fuel demand in China, the world's top net oil importer and a key driver for global oil markets , was about 9.79 million barrels per day (bpd) last month, according to Reuters calculations based on preliminary government data.
That compares to 9.76 million bpd a year ago and is up 1.9 percent from 9.61 million bpd in September. Reuters tallies apparent demand by adding crude throughput with net imports of key refined fuel. It ignores changes in fuel inventories, for which the government rarely publishes data.
China OGP, an industry newsletter under the official Xinhua news agency, said China's fuel stocks fell for the third month in a row between July and September, which means real demand should be stronger than the apparent numbers.
"The startup of new refining capacity and resilient manufacturing activities should support demand through year end," Cheng Sijin, an analyst with Barclays, wrote.
For the first 10 months of 2013, implied oil demand rose 3.1 percent to 9.75 million bpd, according to Reuters calculations. That was still below last year's growth of about 4.5 percent, already the slowest in four years.
Chinese refineries processed 3.1 percent more crude oil last month versus a year earlier at 41.08 million tonnes, or 9.67 million bpd, according to the National Statistical Bureau.
This was nearly 3 percent higher than September, when throughput fell on year as a number of refineries were in the middle of overhauls.
Chinese refiners' margins have improved thanks to a more market-linked price scheme started in March. Top refiner Sinopec Corp said last month its crude throughput gained 6.4 percent in the January-September period versus a year ago, with the gross refining margin reaching $5.49 a barrel, 150 percent higher than a year ago.
October net fuel imports fell 62 percent on year to around 115,160 bpd, according to customs data. The fall was possibly due to the large amount of diesel that Sinopec shipped overseas after securing fresh export quotas.
Steel & Power
On a daily basis, China's average daily crude steel output in October fell to 2.099 million tonnes, versus 2.181 million tonnes in September, as a growing supply glut and falling profitability led mills to scale back production.
Steelmakers are expected to cut production further in the coming months as orders typically fall in winter as construction slows. Declining output will weigh on iron ore imports, which have already begun to fall.
Power output grew 8.4 percent in October versus a year ago at 430.5 billion kilowatt hours, marking the seventh consecutive month of gain, though it's slightly lower than the preceding month in part due to a week-long national holiday.
China's power consumption has been steadily improving since the second half of the year on the back of a steadying economy after Beijing rolled out target policy measures in July to support its economy.
The rebound in power demand has helped halt a near year-long slump in domestic coal prices, while winter restocking has also boosted import demand in the past month.
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