China’s largest refiner, Sinopec, expects domestic demand for oil products to peak by 2025 due to COVID impacts and the rise of electric vehicles, Argus reported on Friday, citing Sinopec’s research think-tank as saying in its annual report.
“China’s oil products will enter a final growth phase before peaking in the next five years,” the Economics and Development Research Institute (EDRI) at Sinopec said, as carried by Argus.
According to the research institute, gasoline demand in China will likely peak in 2025, while demand for diesel could peak as soon as next year.
In 2020, Chinese oil product demand is seen down by 7 percent annually, EDRI said, as the pandemic cut consumption in China first.
Crude oil throughput at Chinese refineries, on the other hand, are expected to remain flat year over year in 2020, at around 13.4 million barrels per day (bpd), the think-tank forecasts.
Despite the expected imminent peak in domestic demand for oil products, refinery capacity in China is set to jump to nearly 20 million bpd by 2025, up from an estimated 17.83 million bpd in 2020, Sinopec’s forecasts cited by Argus showed.
China is already on track to surpass the United States as the world’s biggest oil refiner next year or the year after. Last year, refiners added some 1 million bpd to existing capacity, and there is another 1.4 million bpd of capacity under construction.
The new refinery capacity set to come online in China within the next five years will increase the oil product surplus in the country and lead to 30-percent growth in Chinese exports of refined petroleum products in 2025 compared to 2021, according to EDRI.
Surging Chinese oil product exports are set to put pressure on refiners elsewhere in Asia as the global refining industry is struggling with overcapacity. Refiners around the world have been announcing permanent closures of refinery capacity this year after the pandemic crushed fuel demand worldwide, and significant overcapacity still remains, the International Energy Agency (IEA) said last month.