Battle For Cleaner Air To Impact North Chinese Crude Demand This Winter

China has launched the autumn-winter air protection battle for 2018-2019 in Beijing, Tianjin, Hebei and the neighboring area, which will hit refined oil demand.

Tougher regulations for emissions in the autumn and winter period in north China are being implemented as air pollution is usually more serious at this time of the year when heating becomes a necessity.

According to the country’s action plan for this battle, air pollution in Beijing, Tianjin and 26 other cities in the northern region should improve further this autumn and winter. The average density of PM2.5 (ultra-small particles) in these cities during October 1, 2018 and March 31, 2019 should drop by about 3 percent year on year, and the days with heavy pollution should also decline by roughly 3 percent.

Production in the industrial and mining sectors will be cut during October 2018 and March 2019, or suspended at certain points during these six months. This year's action plan is different from previous years as it adopts different production restriction at different plants and areas. Production at all the construction material producers will be constrained from the beginning of October 2018 to the end of March 2019.

Meanwhile, steel production in cities with relatively heavy pollution should be cut by 50 percent, and in slightly less polluted cities be reduced by at least 30%, the plan says. Companies with better environmental protection records will have to cut production less than their more contaminating counterparts.

This production slowdown is expected to dampen diesel demand from the industry.

The plan also says that goods transport by train should be increased and bulk materials for new or expansion projects should be transported by train, ship or pipeline if possible. More cargo transport by train should lead to lower diesel demand from the trucking sector.

In addition, the plan requires the 28 cities to make three-year action plans to upgrade their fleets of vehicles and ships. Electric vehicles and vehicles that meet ‘’national standards VI’’ should account for 80 percent of the buses, environmental sanitation vehicles, mail vans, taxies, commuter trains and light logistics vehicles in these cities by 2020.

By JLC

More Top Reads From Oilprice.com:

• Trump Sides With Farmers In Battle Against Refiners
• China Blinks First In LNG Face-Off With U.S.
• Oil Prices Rise On Iran, Hurricane Outages