China’s gasoline demand peak nears as EV boom hastens transition

China’s gasoline demand peak nears as EV boom hastens transition

China’s demand for petrol is expected to reach its peak as early as next year due to the surge in electric vehicle (EV) sales, according to several analysts. This acceleration in the energy transition poses a challenge for global refiners and brings forward a significant milestone for the world’s largest polluter. The International Energy Agency (IEA) and consultancy Rystad Energy have revised their forecasts for China’s peak gasoline demand to 2024, while Chinese state majors PetroChina and Sinopec predict it will occur in 2025. This earlier plateau in gasoline demand growth will lead Chinese refiners to increase exports of motor fuel to Asia and focus on producing more naphtha, diesel, and jet fuel, which will impact refining margins in the region.

The shift towards EVs in China is evident in the data, with EVs accounting for 28% of the country’s car market share in January to May 2023, compared to 9% in the same period last year. In contrast, the share of petrol cars has decreased from 91% to 72%. To further promote EV adoption, China is improving charging infrastructure in rural areas and encouraging support from banks, local governments, and auto manufacturers.

As a result of the rapid growth in EV sales, the IEA now anticipates Chinese gasoline demand to peak in 2024 at around 3.7 million barrels per day (bpd), bringing forward their previous projection of demand plateauing in 2025/2026. Rystad Energy also expects the peak to occur in the first quarter of 2024, with gasoline demand reaching 3.7 million bpd. The research arm of China’s state refiner CNPC predicts that gasoline demand will peak in 2025 and decline by 2.3% annually between 2026 and 2030. Sinopec’s chairman Ma Yongsheng predicts that China’s refined fuel demand will peak around 2025 and emphasizes the need to control refining capacity and transition the petrochemical industry to low-carbon, high-end growth.

With gasoline consumption already peaking in the United States in 2019 and China set to follow suit next year, global gasoline markets could experience a surplus from 2025. According to the IEA’s medium-term outlook, the surplus is expected to grow steadily over the next five years, reaching approximately 1.3 million bpd by 2028 if refiners do not make significant output adjustments. This surplus will lead to North America, China, and India becoming net exporters of gasoline in 2028. In response to the shift away from transport fuels, new refineries in China are focusing on petrochemical production, resulting in a global glut. Some refineries are increasing the production of feedstocks like naphtha, while others are producing more chemicals for processing into derivatives.

In conclusion, China’s accelerating transition to EVs is causing a shift in the country’s gasoline demand, with analysts predicting an earlier peak in demand. This shift poses challenges for global refiners and is expected to lead to a surplus in global gasoline markets. Chinese refiners are adjusting their production to focus on petrochemicals, further impacting refining margins in the region.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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