China 1Q Energy Demand Still Weak but Recovering
A worker checks pipes at PetroChina”s Tarim Oilfield in Taklamakan Desert, in China”s western Xinjiang region. AP
China’s energy demand during the first quarter was flat, but there are some positive signs on the horizon.
Oil and gas production numbers were mixed. Crude output was flat, compared with the year-earlier numbers at 3.72 million barrels per day. Gas production for the quarter, however, was up a strong 7.5%, to 21.63 billion cubic meters. And the March gas numbers were even better, up 11.3% to 7.35 billion cubic meters.
In the refining sector, crude runs fell 4.5% to 600 million barrels during the first quarter, but they showed improvement in March, with runs up 0.7% to 214 MMbbl. Gasoline throughput for the quarter increase 7.5% to 16.87 million tons and the March numbers were up by 18%. Diesel output in the first three months dropped 7.1% to 30.12 million tons. March diesel output declined 2.3 percent to 10.78 million tons.
Ethylene production was also weak. For the quarter, it was down 10.7% to 2.39 million tons, but March numbers were down by a somewhat better 9.2 percent.
The critical power generation sector also suffered during the first quarter ,with generation down 2% to 779.7 billion kilowatt-hours. March numbers showed a decline of 1.3%. While thermal generation fell, output from China’s hydropower sector surged, up 24% to 96.2 billion kWh. Nuclear output also rose, increasing 3.6% to 13.9 billion kWh.
China’s coal output was up during the first quarter, rising 6.3% to 601.6 million tons. March numbers were better still, with production rising 10.3% to 233.4 million tons.
Some analysts now believe that China’s overall energy demand could rise in the second quarter as the economy begins to recover. And to be clear, China is not seeing the same kind of declines as the US and Europe. During the first quarter, the Chinese economy grew by 6.1%.
The central government has pumped nearly $600 billion into the economy, with the hope that it can grow the overall economy at a rate of 8% in 2009. Those government investments are being targeted at energy-intensive sectors such as steel and construction materials. And a recent report by investment bank JP Morgan noted that several major government-funded infrastructure projects were launched in late March, a move that will almost certainly boost energy demand.