Key facts
- China's fuel consumption has declined significantly, with gasoline sales down 8% and diesel down 6% year-on-year in April.
- The shift is attributed to economic choices, higher fuel prices, and increased use of electric vehicles and public transport.
- China's crude oil imports fell 29% in May to their lowest level in eight years.
- Sinopec forecasts a 10% year-on-year drop in gasoline, diesel, and jet fuel demand for the second and third quarters.
- The trend has eased pressure on global oil markets, particularly amid concerns over the Strait of Hormuz.
China's demand for oil products has fallen more sharply than anticipated, easing pressure on global oil markets that were already concerned about supply disruptions from the Iran war. Data from Sinopec, the world's largest refiner, indicates an 8% year-on-year drop in gasoline sales and a 6% fall in diesel sales in April. Industry analysts from Goldman Sachs and GL Consulting estimate even steeper declines, around 20% and 15% respectively.
This trend is attributed not to reduced overall mobility, but to a significant shift in transportation methods. Rail journeys have seen accelerated growth, and the increasing adoption and use of electric vehicles (EVs) and electrified public transport like subways and taxis are reducing reliance on oil-based fuels. China's EV fleet, the world's largest, saw charging activity surge 69% year-on-year in April.
Analysts suggest consumers are making economic choices, moving away from oil-based transportation due to higher prices for gasoline, diesel, and airfare. This behavioral change, coupled with the ongoing property sector crisis impacting diesel demand for construction, has led to drastic cuts in crude oil imports. May imports fell 29% to an eight-year low of 7.8 million barrels per day, following a 20% drop in April. While drawing down stockpiles is unsustainable long-term, the persistence of these behavioral shifts has significant implications for global oil demand and China's refining sector.
Sinopec forecasts a roughly 10% year-on-year decline in gasoline, diesel, and jet fuel demand for the second and third quarters. This contrasts with earlier forecasts predicting smaller decreases. The increasing use of EVs is evident, with about a third of vehicles on highways during the recent May Day holidays being electric or hybrid. Ride-sharing company Didi reported that half of its car rental bookings during the holiday were for electric or hybrid vehicles. The key question remains whether these changes are permanent, with some analysts believing that at least part of the gasoline demand shift is here to stay.