sceptics of China’s GDP data often look to alternative indicators from outside the country for more reliable reads on the economy.One excellent proxy for economic activity is energy demand.
The CEO of Ecopetrol, Colombia’s public-private oil producer and the largest company in the country, says he sees no slowdown in Chinese demand for the company’s heavy crude product.
Speaking to reporters at a gathering in Midtown Manhattan, Javier Gutiérrez said the company now exports 20 per cent of its product to its Far Eastern market and intends to increase the figure in coming years.
“They need better margins,” he said referring to the differential between the cost of crude oil and the price of refined energy products.
Chinese refiners continue to build up their coking capacity — just 5 per cent of the country’s total oil capacity consists of heavy crude, according to Oil and Gas Journal’s Christopher E. Smith.
Ecopetrol’s market equation has shifted dramatically in just the past five years, from 60 per cent of its sales coming domestically to now 60 per cent coming from exports.
So while profitability could improve, the bottom line for China watchers is that demand is robust.
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