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China’s oil product market showed signs of improvement in 2023, thanks to the diminishing impact of the Covid-19 pandemic and the recovery of the domestic economy. In 2024, jet fuel demand is expected to continue its upward trend, with a projected 15% year-on-year rise. Gasoline demand is anticipated to grow by a modest 2%, still below the peak level of 2021. The demand for gasoil is expected to return to the pre-pandemic downtrend from 2024 onwards.
China’s crude throughput is forecasted to grow by a modest 2.7% in 2024, a slowdown from the 9.3% increase seen in 2023, due to a persistent oversupply in the domestic market. The Chinese government will intensify its efforts to ensure compliance in the domestic oil product market, which is expected to squeeze the supply of refining feedstock for independent refineries.
China’s gasoline demand increased by 9% from the previous year to 160 million tonnes in 2023, fueled by relaxed epidemic control policies that spurred travel and family visits. However, the accelerating shift towards electric vehicles (EVs) will slow the demand growth in 2024. Gasoline demand peaked in 2021 and is predicted to revert to the 2019 levels by 2024, remaining below the peak. The demand is expected to be on a downward trend in the long run.
Gasoil demand rose by 3% to approximately 215 million tonnes in 2023, largely driven by strong transportation demand from the express delivery service sector. However, the transportation of bulk commodities, such as steel and cement, remained sluggish. Moreover, the manufacturing, mining and construction sectors showed weaker demand for gasoil than expected. The outstanding cost advantage of LNG trucks further pressured gasoil consumption. GL Consulting predicts that China’s gasoil demand will decrease by 1.5% year-over-year in 2024.
China’s jet fuel demand in 2023 had almost returned to the pre-pandemic levels. With the continued recovery of international flights, the demand in 2024 is anticipated to climb up by 15% from the previous year to 44.9 million tonnes.
China’s refining capacity is expected to reach its peak by 2027.
The country’s 2024 crude throughput is projected to increase by roughly 2.7%. Over the next 3-5 years, around 50 million tonnes/year of new refining capacity will be operational. With outdated facilities being phased out, it is anticipated that China’s refining capacity will reach its peak at approximately 992 million tonnes/year by 2027, and enter a period of stabilization by 2030.
China will continue advancing oil product market compliance in 2024. Stricter measures will be implemented to address the mislabeling of import fuel oil as other products, which serves as feedstock for independent refineries. As a result, feedstock imports mislabeled as “other heavy oil,” “other fuel oil,” or “diluted bitumen” will likely decline, leading to a tighter supply of refining feedstock for independent refineries.
