China to Face Long-term Oversupply of Gasoline and Diesel

At present, China’s gasoline prices are increasing rapidly, due to the new consumption tax policy. But one important issue we should know is China’s sufficient supply at present. In addition, China’s oil refining capacity will continue rising, with the construction of the seven refining and chemical bases.

On the demand side, China’s gasoline consumption is stabilizing after the great increase in past years. In particular, the new energy vehicle industry is weighing down the demand for gasoline. From January to November 2017, China’s gasoline apparent consumption volume increased by 3.45% from the same period of 2016. Scarce new supporting factors will push up the consumption of gasoline in the future.

The demand for diesel is impacted a lot by China’s economy structure upgrade. The second industry is taking up a smaller proportion in China’s economy, which leads to the decline in China’s diesel consumption growth. From January to November 2017, China’s diesel apparent consumption volume increased by 2.96% from the same period of 2016.

On the supply side, China’s gasoline supply was higher than the demand from 2010, and the export volume was increasing year by year. From January to November 2017, China’s net export volume of gasoline was 9.31 million mt, taking up 7.65% of China’s gasoline output. On the diesel market, the net export volume of diesel was 14.52 million mt from January to November 2017, taking up 8.67% of the total output.

It is predicted that China’s gasoline output will reach around 150 million mt in 2020, and the diesel output will be around 200 million mt. China’s export volume of gasoline and diesel will increase beyond expectations.