It is expected that China's gasoline consumption will kick off the traditional peak season in July but is expected to fall below the level at the same period last year due to booming popularity of electric vehicles (EVs), per OilChem analysis.
China's gasoline consumption is estimated to hover around the annual high at approximately 465,000 tonnes/day in July, a monthly increase of 4.6% from the daily average in June, but down 3.4% year on year, based on OilChem prediction model.
Source: Mysteel OilChem
The momentum in July will be contributed by the summer traveling season, and the frequent use of vehicle air conditioners amidst high temperature is likely to lift the consumption by around 1-2%.
However, the booming EV market is likely to pull back the consumption below the level in the same period last year. Data showed that the EV ownerships took up nearly 7.7% of the total by the end of June, with an average mileage of 16,800 km/year, against 10,100 km/year for fuel vehicles.
Meanwhile, the substitution rate of EVs over fuel vehicles is expected at 14.5% in July from 14.2% in June 2024 and merely 9.0% in July 2023. Therefore, it is irreversible that the gasoline consumption will keep falling year by year.
On the supply side, domestic gasoline production is likely to show a monthly increase of 3.4% at around 481,000 tonnes/day in July, down 5.2% YoY. The monthly rise will be driven by the rising capacity utilization rates of domestic refineries which are estimated at 69.4% on average in July, as well as an expected improvement on the demand side.
Source: Mysteel OilChem
In addition, China's gasoline exports are planned at around 0.7 million tonnes, in the face of poor export profits and slightly insufficient export quotas as the next batch is anticipated in September.
Taken together, China's gasoline inventory is likely to register a monthly fall of around 0.2 million tonnes at 16.70 million tonnes by the end of July, down 0.5 million tonnes from last year.
In conclusion, the expected slight fall in gasoline inventory is likely to support the domestic gasoline prices, in addition to traders more active in building stocks at the beginning of the month. But the already high gasoline prices and yield rates will potentially weight on the price performance.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com