It is estimated that China's gasoil consumption will stage an annual fall of 5.60% in the second half of 2024, against a four-year contraction of 4.34% over 2020-2023 after the consumption peaked in 2019, according to OilChem prediction model and database.
Source: Mysteel OilChem
The contraction in the second half will be primarily contributed by the logistics and infrastructure construction sectors, with a combined curtailment of around 5 million tonnes compared with the same period of last year.
The falling consumption in the logistics sector is mainly caused by outstanding cost efficiency of heavy-duty LNG trucks against gasoil-powered trucks, as well as rising use of electric commercial vehicles.
In the first half alone, heavy-duty LNG trucks, electric trucks, and electric commercial vehicles reduced the consumption of gasoil by 15 million tonnes, 1.6 million tonnes, and 6.3 million tonnes respectively, which is expected to keep expanding in the second half, per OilChem survey.
In addition, the gasoil consumption in the engineering, mining, and infrastructure construction field is likely to report an annual fall over 10% through 2024, due to factors like funding, extremely great rains in South China, etc.
Corresponding with the sagging consumption, China's gasoil production is estimated to be down 5.89% year on year in the second half of 2024 with the refineries struggling to balance the supply and demand, especially the state-owned ones.
Source: Mysteel OilChem
In the second half, the state-owned refineries' maintenance is likely to involve a total capacity of 141 million tonnes/year, up 52 million tonnes/year YoY, per OilChem survey. And those without maintenance plans will adjust their production scheduling based on the actual demand. In addition, some outdated units of state-owned refineries are likely to be idled eternally, leading to additional production loss.
For independent refineries, the gasoil profits are projected to return to the low level in July, which will even hurt their confidence towards the consumption peak. In this case, the gasoil yield rates are unlikely to re-stage the momentum in previous years over August-October.
Nevertheless, the moderate profits of other units like wax are expected to underpin the gasoil production during this period. In addition, the commissioning of Yulong Petrochem, a large-sized refining-chemicals integrated refinery, in October has been counted in as well.
However, the depleting crude oil import quotas in November and December will then restrict the production of independent refineries, coupled with anticipated losses of processing alternative feedstock like bitumen mixture and fuel oil.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com