State-stimulated recovering industrial activity and increased road freight and e-commerce deliveries are set to push up China’s diesel demand to a record high this year, analysts have told Reuters.
China’s recovering economy and the government stimulus to infrastructure activities are set to boost demand for heavy machinery and diesel to power them, analysts say. Other factors contributing to the high demand for diesel include booming e-commerce with road freight deliveries and strong mining activities, SIA Energy’s senior director Seng-Yick Tee said.
China’s diesel consumption in 2020 could increase by between 60,000 bpd and 90,000 bpd to reach a record of 3.8 million bpd-4.1 million bpd, beating the previous all-time high from last year, consultancies SIA Energy and FGE told Reuters.
Sales of heavy-duty trucks in China are expected to boom this year, while gasoline-powered passenger car sales are set for a third consecutive year of annual declines, IHS Markit’s light vehicle expert Tao Gao told Reuters.
While diesel demand is set for an all-time high, demand for gasoline is forecast to be either flat year over year, or to post a small single-digit decline, analysts told Reuters.
China’s jet fuel demand, like everywhere in the world, will suffer the most in terms of percentage slump. Domestic flights have somewhat recovered, but the number of international flights is still much lower than it was before the pandemic, travel restrictions, and quarantine rules.
Oil imports into China – the world’s top oil importer – held up during the Chinese lockdown and surged to record-highs in June, after Chinese refiners had rushed in April to stock up on the cheapest crude in years.
For the first half of 2020, despite the lockdown in the pandemic, China’s crude oil imports jumped by 10 percent year over year to an average of 10.95 million bpd.
In July, China imported 12.08 million bpd of crude oil, according to official customs data, which was lower than the record-breaking import rate in June but 25 percent higher than the average for July 2019.
By Charles Kennedy for Oilprice