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Weakening Chinese car sales and slowing economic growth weigh on China’s demand growth of key oil products such as gasoline and petrochemicals, S&P Global Platts Analytics says.
China’s new car sales slumped by 4.3 percent year on year in July, dropping for 13 months in a row beginning in July 2018, according to data from the China Association of Automobile Manufacturers (CAAM) cited by Nikkei Asia Review. Car sales in China are on track for their worst year in history and on course to book a double-digit decline this year, according to Nikkei. Analysts and manufacturers say a marked recovery in the latter half of the year is unlikely. LMC Automotive, for example, sees China—the world’s biggest car market—recording its second straight annual decline in car sales.
Lower car sales, combined with the high uncertainty about the impact of the U.S.-China trade war on the economy and on consumer sentiment, do not bode well for Chinese gasoline and petrochemical demand growth, analysts at S&P Global Platts Analytics say.
According to Anthony Tso, senior analyst at Platts Analytics, gasoline demand growth in China has been weakening slowly. This year’s demand growth in gasoline is seen at some 75,000 bpd, which would be a 29-percent slump from 2018, Tso told S&P Global Platts.
Weaker growth in Chinese gasoline demand could spur more gasoline exports out of China, which is already grappling with a fuel glut.
China may boost its gasoline exports in the second half of the year, due to the fuel glut in its domestic market and to higher export quotas, analysts at JLC said this week.
China’s refinery throughput went up by 4 percent in July, to a total 52.6 million tons, or about 12.44 million bpd. That’s down from a record-high processing rate of 12.68 million bpd, recorded first in January and February this year and then again in April. It is still going pretty strong, thanks to higher demand for crude from independent refiners who are building new refining capacity.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
I figure about 12% to 16% of Chinese auto buyers are holding out for EVs. Some 8% are buying EVs right now, while other 4% to 8% are simply delaying purchase of any vehicle a few months or years while they consider buying an EV. The consequence of this delay is to depress auto sales by 4% to 8%.
In China, where many consumers are still transitioning from public transport to private auto ownership, this hesitation to buy soon to be obsolete gasoline-powered or diesel-powered vehicles means that growth in gasoline demand stalls out a year or two before enough EVs can come on the market to satisfy EV demand.
So yes, EVs are already starting to have a material impact on demand for gasoline and diesel.