China's oil demand starts to decline after 2023, when it peaked.
The oil products demand in China - long the driving force behind global crude consumption - peaked in 2023. It is expected to decline by 1.1% per year between 2023-2025. This drop will accelerate in the following years, according to a China oil analyst.
The decline in Chinese oil demand due to the adoption of LNG trucks and electric cars (EV), and China's slower economic growth after the COVID-19 epidemic, have been drags on global oil prices and consumption.
The demand for oil products in China fell 0.5% in the first six months of the year. This was mainly due to a drop in diesel, which dropped by 5.8%. However, gasoline and jet fuel, both grew by 1.6% and 17.6% respectively on account of travel demand.
The researcher stated that "China's product (demand) has already peaked last years", adding that consumption will decline by 1.3% in 2024.
The researcher said that oil products demand is expected to slow by an average of 2,7% per year from 2025 to 2030 and by 3,2% per year from 2030 to 2035. This is due to the shift to cleaner fuels and economic and social change.
The researcher stated that China's LNG truck fleet was 730,000 vehicles in June, and it is expected to reach 850,000 by year-end. This will replace 280,000 barrels of diesel per day in 2024.
The use of LNG as a fuel for trucks has affected diesel sales at fuel stations on highways.
The researcher stated that the proportion of LNG-powered trucks in China is currently 33%, and could rise to 50% in provinces like Shanxi or Ningxia.
The researcher says that gasoline demand in China will peak in 2025 as EV penetration exceeds the government's target. Sales of new cars are expected to increase by 29% to 12.2 million units this year, a 40% increase from 2023.
The researcher said that EVs are being driven by the affordability of power and technological advances which reduce charging times and increase driving range.
The researcher predicted that China's jet-fuel demand will recover to 83% its 2019 level by year-end.
The growth in jet fuel consumption is not enough, however, to stop the decline of refined products, as it represents a smaller portion of demand compared to diesel and gasoline.
The researcher says that China's refinery capacity is growing at a slower rate as fuel consumption falls and refiners shift to petrochemicals.
According to the researcher, crude oil refinery capacity in Canada is expected to reach 19.3 million barrels per day (bpd) by 2025. This will increase slightly, reaching 19.6 million bpd, by 2030.
They said: "Coal, oil, and natural gas will all peak. But we do not see petrochemicals reaching their peak (yet), with the economic growth and 1.4 billion people."
(source: Reuters)
