Asia/Pacific News
Chinese Fuel Oil Demand Predicted to Fall in 2013
Deutsch Bank AG predicts China's use of fuel oil may decline in 2013 after a 4.4 percent rise last year as new government policies make it less attractive as a feedstock for refineries, according to a Bloomberg News report.
Overall, the bank predicts that the nation's oil demand will rise by 4.9 percent, an upward revision from its prediction last month of 3.4 percent growth.
In December, China processed or imported 10.6 million barrels per day of refined products, up 9.1 percent from December 2011.
"The sharp recovery in demand from September 2012 likely reflected some level of inventory building," Soozhana Choi, Deutsche Bank's chief oil strategist in Singapore, said in the report.
"However, we believe actual demand was underpinned by improving economic growth.
"Our China economists believe that key drivers of this year's recovery will be corporate and infrastructure investments, which should prove positive for raw materials demand."
Despite the general increase in demand for oil, the use of fuel oil is likely to be reduced by new taxes and crude import licenses.
New Chinese tax policies implemented January 1, 2013 make it more difficult for domestic blenders and small "teapot" refineries to avoid a tax on fuel oil.
