Diesel Consumption Drops in China!

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Our estimates of diesel consumption in China totaled 3.9 million barrels per day (b/d) in June 2024, a decline of 11% from the identical month final 12 months and the biggest year-over-year decline in consumption for any month since July 2021.

From 2020 to 2022, China’s authorities, companies, and communities used social distancing and stay-at-home orders as the first methodology to stop the unfold of COVID-19, which often disrupted journey and triggered fluctuations in diesel consumption. After establishing one other all-time excessive in 2023, diesel consumption started declining within the second quarter of 2024. We attribute the current decline in diesel consumption to 2 main elements—slowing financial exercise, largely due to a slowdown in constructing and housing building, and the substitution of liquefied pure gasoline (LNG) for petroleum diesel gasoline in heavy-duty vans.

China’s GDP grew 4.7% from final 12 months within the second quarter of 2024, a bit lower than the federal government target of 5%. Though sooner than most progress charges in developed economies in OECD international locations, this GDP progress price is a number of share factors slower than China’s progress price within the years earlier than the pandemic. Consumption and funding indicators partially clarify the slower progress price. Though unstable across the pandemic years, modifications in retail gross sales, housing costs, and producer costs in China all present slowing or declining exercise in 2024. Slowdowns in trucking exercise and building correlate with reductions in China’s diesel consumption as a result of diesel consumption is linked with these financial actions.

Apart from much less use of diesel due to slowing financial exercise within the building and property sectors, a small however rising share of China’s trucking fleet is utilizing LNG as a substitute of diesel for gasoline. Based on information and evaluation from BloombergNEF, LNG truck gross sales have made up round 20% of whole truck gross sales from the third quarter of 2023 by means of March 2024. Though nonetheless small relative to the whole truck fleet in China, the rising market share of LNG vans is displacing some diesel consumption within the nation.

China’s National Bureau of Statistics and General Administration of Customs publishes month-to-month information on crude oil refinery processing, refined petroleum product output, crude oil and petroleum product imports, and crude oil and petroleum product exports. The businesses don’t publish stock ranges or inventory modifications. Due to this exclusion, we calculate China’s obvious demand of diesel as refinery manufacturing of diesel plus imports minus exports. This calculation is completely different from product suppliedour proxy for consumption in the USA, which accounts for inventory modifications. Regardless of missing stock information, China’s month-to-month petroleum statistics can function a helpful information for basic tendencies within the nation’s petroleum market.

We barely lowered our forecast petroleum consumption progress in China in our August Short-Term Energy Outlook. We forecast China’s petroleum and liquid fuels consumption will develop by about 0.3 million b/d in 2024 and in 2025. Our forecast progress price is slower than the 2015–19 common annual progress price of 0.5 million b/d.

Principal contributor: Jeff Barron. Article first printed on EIA’s Today in Energy.