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China’s oil refiners are slowing down after decades of growth, in a blow to global supply

  • Of the six analysts and consultants surveyed by Bloomberg, three forecast a year-on-year decline in processing, two predicted flat refining while one projected a gain

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China National Offshore Oil Corporation’s oil refinery in Huizhou in southern China’s Guangdong province on July 28, 2009. Photo: Reuters

China’s decades-long boom in oil processing could falter this year in a blow to global demand and the aspirations of Opec producers seeking to return supply to the market.

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Oil refining in the world’s top crude importer is expected to be flat or fall for the first time in data that extends back to 2004 – excluding a Covid-hit 2022 – according to most market watchers surveyed by Bloomberg. The IEA this week also reduced its processing forecast, but still sees a gain.

A prolonged property crisis has weighed on China’s economy this year, while the steady uptake of new-energy vehicles and trucks powered by gas are flashing bearish signs for future oil demand. The nation’s refiners are extending maintenance schedules to account for lower consumption.

China refined a record 14.76 million barrels a day last year – known as crude throughput – as demand rebounded after the pandemic, but the recovery is showing signs of faltering. The International Energy Agency said in a report Wednesday that the nation’s refinery runs slumped to Covid-era levels in April.

Of the six analysts and industry consultants surveyed by Bloomberg, three forecast a year-on-year decline in processing, while two predicted refining would remain flat. One projected a gain.

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Jianan Sun, a London-based analyst with Energy Aspects, is in the camp that sees a decrease, along with industry consultants Mysteel OilChem and GL Consulting. Sun only recently flipped his estimate from an increase of 100,000 barrels a day this year to a loss of the same magnitude.

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