March 20, 2020 / 5:39 AM / 17 days ago

UPDATE 2-China's March oil demand to recover from Feb, still seen down 19.1% y/y -Sinopec newspaper

* Diesel leads rebound, but still down 11.4% y/y - report

* March gasoline demand seen -22.5% y/y

* Aviation fuel slowest to recover, Feb sales down 64% y/y -source (Adds background, analyst comment; paragraphs 3,5,8,9,14-17)

By Muyu Xu and Chen Aizhu

BEIJING/SINGAPORE, March 20 (Reuters) - China’s refined oil consumption is expected to recover in March from a month earlier, as companies resume operations and travel curbs are removed, but demand is likely to be down 19.1% on the year, for the steepest contraction since at least 2004.

As China and its central city of Wuhan, the epicentre of a coronavirus outbreak, have reported no new domestic transmission, Beijing has strived to bring business and the economy back to normal.

“With substantial progress being made on virus containment, the impact on China’s transport fuel demand, especially on gasoline and diesel, should be eased significantly in March,” said Joey Chen of consultancy FGE.

Apparent refined oil consumption- including diesel, gasoline and jet fuel- would reach 21.19 million tonnes in March, with average daily consumption increasing 41% from February, Sinopec’s official newspaper said, citing a research arm of China National Petroleum Corp (CNPC).

Jet kerosene is expected to be the slowest to recover, however, with a forecast fall of 39.8% in March consumption from the corresponding month last year, as nations adopted strict travel curbs to slow the spread of the virus.

“Based on data from the SARS outbreak in 2003, it takes time to rebuild confidence in travel. It will be hard for jet kerosene demand to rebound to normal levels in a short time,” said CNPC research.

China’s aviation fuel sales plunged 64% in February from a year earlier to 860,000 tonnes, according to a person with direct knowledge of the matter.

The February sales came off January’s 2.4 million tonnes, a level largely flat from a year ago, while fuel sales for international flights tumbled 80% on the year, the source added.

A representative of China National Aviation Fuel Corp, which holds a near monopoly on jet fuel distribution, did not immediately comment on the data.

CNPC research did not release the absolute figure for jet kerosene demand in March.

Analysts at China-based Sublime Information Corp expect consumption would reach around 2 million tonnes.

China’s gasoline demand in March is expected to fall 22.5% on the year, with the rate of contraction nearly halved from February.

Diesel demand is expected to rebound from a low level in February, but consumption is estimated to be 11.4% lower on the year.

Diesel fuel, used for road transport, farming and mining, is expected to lead the recovery among transport fuels, aided by government policies, such as waiver of highway tolls, and seasonal farming demand, the report said.

China’s total refined oil output is forecast to dip 9.1% this month from a year earlier as refineries hold to low operating rates, according to the report.

While dominant state refiners Sinopec Corp and PetroChina maintained deep output cuts, China’s independent oil plants have cranked up operations, encouraged by an improving refining margin.

“Refined oil consumption in China is expected to continue seeing negative growth in April,” said the report, as usage rates at factories remain low and some workers have not returned to their jobs. (Reporting by Muyu Xu in Beijing and Chen Aizhu in Singapore; Editing by Tom Hogue and Clarence Fernandez)

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