Will recovery in China's energy demand initiate by year end?

19-Nov-08

China has announced an unprecedentedly huge economic stimulus package worth 4 trillion yuan (US$586 bln) to be infused by the end of 2010. The package is aimed at boosting domestic demand by providing financing to 10 major infrastructure programs over the next two years, including transportation, rural projects, low-cost housing, environmental projects and post-disaster reconstruction. When the effects of the stimulus package set in, energy demand is expected to start recovering in China- possibly by the end of the year. Fuel demand has contracted ``sharply´´ since September because of the global credit crisis. Oil demand may rise 5% this year from 2007. Oil demand growth is likely to slowdown next year, especially in the first half - it is forecast to rise 3.7% to 8.2 mln bpd in 2009, lower than last month's estimate of 8.4 mln bpd as per the IEA. Consumption this year will increase 5.2% to 7.9 mln bpd, which is about 60,000 barrels lower than last month's forecast.