Along with the imported volumes, the utilization of the Chinese refining capacity also decreased: in 2023, the total refining output including the feedstock produced in China was 14.8 mbpd, and in 2024 – 14.2 mbpd. The slowdown of the demand in the transportation sector could be the key driver. According to OPEC, the demand for motor gasoline in the PRC in December 2024 decreased by 3.4%, and the demand for diesel fuel – by 0.9%.
Electrification of cars and gasification of trucks played a certain role. According to the Chinese Association of Car Manufacturers, the sales of e-vehicles, hybrids and fuel cell vehicles in 2024 grew by 35.5% (up to 12.9 mln vehicles), and their share in the total sales of all vehicles grew from 35.7% in 2023 up to 45.7% in 2024. In the next several years, this share will exceed 50%, partly due to customs duties for importing Chinese e-vehicles into the US and Europe: trade restrictions will be pushing Chinese suppliers to further shake-out of internal combustion engines from the domestic market.
In its turn, the growth of gas production in China to a certain extent impacts the level of trucks gasification, and similarly – gradual return of global gas prices to the multiyear standards. According to some open sources, sales of LNG-fueled trucks in China at the end of the first nine months of 2024 grew by 40% YoY, and their share in total sales of new trucks reached one third.
In addition to gasoline and diesel fuel, China decreases its consumption of naphtha, the feedstock for petrochemical industry, which is also produced from oil. According to OPEC, the demand for naphtha in the PRC in December 2024 decreased by 4.4% YoY. It was impacted by the growth of popularity of liquified petroleum gases (LPG) including propane, butane and propane-butane, which are one of the alternatives to naphtha in the petrochemical industry. According to Argus, in 2024 China ramped up its LPG imports by 11% (up to 34.5 mt) – among other things, it could decrease the need for oil for the purposes of producing naphtha.
Overall, the 2024 oil imports data confirm that the expansion of e-vehicles and gas-fueled vehicles already affect the oil consumption dynamics in China. At the same time, the petrochemical industry cannot compensate the observed demand contraction.
