China's oil product demand to extend decline by 2% in 2025: CNPC ETRI

China's oil product demand is expected to continue declining to 382 million mt in 2025, although the reduction is forecast to slow to 1.9% year over year, compared with 2.4% in 2024, from the peak in 2023, CNPC's Economic & Technology Research Institute said Jan. 21.

Demand for gasoline and gasoil will continue to drop as new energy vehicles and LNG heavy trucks competitively displace them.

For NEVs, ETRI estimates that overall ownership will reach 45 million units in 2025, replacing 38 million mt (885,000 b/d) of gasoline consumption, up 10 million mt from 2024.

However, with the government expected to implement more stimulus measures, ETRI anticipates that China's gasoline demand will be supported by a 10% growth in road transportation in 2025, helping to partly offset the demand displacement by NEVs.

As a result, ETRI projects the country's gasoline demand to drop 3.4% year over year to 153 million mt (3.56 million b/d) in 2025, extending the 2024 decline by 0.3 percentage point.

For gasoil, demand is expected to fall 3% year over year to 186 million mt (3.8 million b/d) in 2025, a smaller decline compared with the 4.8% drop seen in 2024, ETRI said.

Nevertheless, LNG heavy trucks are anticipated to displace around 28 million-30 million mt of gasoil consumption, accounting for more than 15% of the total gasoil demand in 2025.

Jet fuel demand is expected to continue leading, rising 3.6 million mt, or 8.9%, year over year to 43.4 million mt in 2025, according to ETRI.

Crude throughput to rise nearly 3%

ETRI expects China's crude throughputs to rise 2.5% year over year to 734 million mt (14.74 million b/d) in 2025, supported by macroeconomic policies that would aid the recovery of oil demand.

This compares with a 3.1% year-over-year drop in 2024, which was the first decline in the 21st century, except for 2022 when the country was under strict coronavirus pandemic-related controls, according to ETRI.

In line with the throughput growth, China is anticipated to increase crude oil imports by 1% to 559 million mt (11.22 million b/d) in 2025, while domestic crude production is expected to rise 1% to 215 million mt, ETRI said.

Meanwhile, China's refining capacity is expected to reach 951 million mt/year (19.1 million b/d) in 2025, down 4 million mt/year from 2024, according to ETRI. The drop will primarily result from PetroChina's Dalian Petrochemical shutting its existing 10 million mt/year capacity in mid-2025, although Daxie Petrochemical will add a new 6 million mt/year capacity with the startup of its upgrading project.

Looking ahead, ETRI projects China's refining capacity to peak at 980 million mt/year (19.7 million b/d) in 2028, as several expansion projects are still underway. These include PetroChina's Guangxi Petrochemical, Jilin Petrochemical and Dalian Petrochemical; Sinopec's Qilu Petrochemical; and independent refiner Fuhai Petrochemical.

Oil product surplus to rise 12%

With the continued push by China's oil companies to reduce oil product output and increase petrochemical yields, the country's oil product production is expected to decline further by 0.7% year over year to 422 million mt in 2025, according to ETRI.

Due to the 1.9% decline in domestic oil product demand, ETRI forecasts a supply surplus of 40 million mt for oil products in 2025, up 12% year over year. These excess barrels are likely to be exported to help balance the domestic market.

In 2024, China's exports of clean oil products -- comprising gasoline, gasoil and jet fuel -- fell 12.6% year over year to 36.66 million mt (797,000 b/d), the latest data from the General Administration of Customs showed Jan. 20.

ETRI also warned that oil product output from upcoming coal-chemical projects could further increase the domestic supply surplus.

These include the latest project by CHN Energy, which began construction in January in Hami, Xinjiang province, and is expected to produce around 4 million mt/year of oil products in the future, according to ETRI.