The apparent rise in China’s crude oil imports has been a major factor behind the doubling of oil prices in the last year. Yet a detailed analysis by Petromatrix illustrates that reality is a little different from the headline:
• China has been importing more oil, as its new refineries come online (alongside its new petchem capacity).
• But domestic oil demand has not been increasing at the same level.
Petromatrix estimate that China’s “refinery runs are growing at double the pace of Chinese oil demand growth“. The result is shown in the above graph, which shows how China has “turned into a significant exporter of oil products” in recent months.
There is no doubt that China’s own demand has grown over the past year. But Petromatrix’s analysis suggests the underlying picture is more complex. When this will be recognised by oil markets is an open question. In the meantime, other Asian refiners are clearly paying the price for China’s refinery expansion.
5 thoughts on “China becomes significant exporter of oil products”
Leave a Comment
You must be logged in to post a comment.
Thank you Paul. You are one of the few nay sayers who are questioning the 58% increase in January in China demand.
What is your take on the impact of subsidy elimination on gasoline products in China.
Very interesting. I heard that Chinese refiners are guaranteed a margin by the government on middle distillate exports.
I am sure there was extra demand in January, as the comparison was with the bottom of the downturn in Q1 last year, plus the LNY holiday, plus the severe snowstorms! The reported subsidy elimination seems to me to be part of the government’s attempt to roll back the bubble that they have created in housing/autos etc with the easy money policy. It is very easy to start these bubbles, but very difficult to stop them without a degree of pain, as we saw in the US in the 2007/8 period.
Ashok, yes, the OGJ reported last week that a flat rebate was now being introduced as follows:
“In other news, China Petroleum & Chemical Corp. (Sinopec), China’s largest producer and supplier of oil and petrochemical products, reportedly is introducing this month a special $19/tonne export subsidy on oil products to help its refineries clear up unwanted stocks of oil products”
OPEC calls oil prices “beautiful”
OPEC’s meeting wrapped up quickly yesterday, with Saudi oil minister Ali al-Naimi once again saying oil prices today were “beautiful”. This highlights sentiment’s ability to take prices in the opposite direction to fundamentals. For certainly, on funda…