China’s gasoline demand to return to last year’s levels soon
BAKU, Azerbaijan, May 26
By Leman Zeynalova – Trend:
China’s gasoline demand will return to last year’s levels soon, Trend reports with reference to Wood Mackenzie.
Wood Mackenzie research associate Yuwei Pei said that private car use is now seen as the safest mode of mobility, shifting passengers from public transport to private cars.
As a result, gasoline demand is recovering quickly and is likely to return to last year’s levels by June 2020. Wood Mackenzie estimates gasoline demand to reach 3.4 million b/d in Q2, just a 0.8 percent decline YoY. By third quarter this year, China’s gasoline demand would have surpassed the same period last year by 3 percent to 3.5 million b/d.
China’s oil demand will recover to 13 million barrels per day (b/d) in Q2 2020, a 16.3 percent jump compared to Q1 this year.
However, comparing year-on-year (YoY), Q2 2020 demand is about 2.5 percent below Q2 2019. The pace of recovery differs among oil products. China’s demand for gasoline and diesel are expected to increase YoY from Q3 2020 onwards.
Diesel or gasoil demand is recovering this quarter as well, supported by industrial and road freight activities. China’s demand is expected to reach 3.4 million b/d in Q2 2020, a 3 percent decline YoY. Courier delivery services are emerging as a major growth driver of road freight, reflecting a surge in e-commerce. This is reflected in demand turning green by 1.2 percent to 3.4 million b/d in Q3 2020 compared to the same period last year.
On the other hand, China’s jet fuel demand will continue to fall for the rest of the year. Wood Mackenzie expects an even larger YoY decline of 51 percent to 0.4 million b/d for demand in Q2 to compared to Q1 this year. Air traffic remains weak due to restrictions on international flights and precautions taken by passengers to avoid crowded places. China’s aviation industry is also struggling financially due to the coronavirus pandemic.
Overall, China’s oil demand is expected to rise a modest 2.3 percent to 13.6 million b/d for H2 2020, compared to H2 2019.
Despite some pockets of recovery in China’s oil demand for the rest of the year, Wood Mackenzie consultant Yujiao Lei warns of external risks that could set the country back.
She said: “China’s oil demand recovery trajectory will depend on how the pandemic pans out globally. Even if China avoids a second wave of infections, as long as the pandemic remains globally, the country will maintain strict border controls, thus restraining aviation. Besides, the ongoing global economic downturn will likely have an adverse impact on China’s exports and investments, putting downward pressure on industrial and commercial transport activity.”
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