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China’s Refining Industry – The Transforming Giant

China’s fuel demand pattern is changing. During the past 10 years, China’s GDP growth has been due to massive national industrialization and development, resulting in incredible manufacturing and exporting strengths. China has surpassed Germany as the worlds largest exporter, in revenue terms.

As economics grow, they also undergo internal transformation. Although heavy industry is normally seen as primary growth sector, other sectors such as agriculture and services can also have a significant contribution. Nexant’s heavy industry index for China, which is built up of major industrial indicators, shows a slowly down in 2015 and indicates a growth in the proportion of the GDP being derived from service based industries.

China’s economy currently accounts for approximately 15% of global GDP. For such a large economy, any change in the GDP contribution has a profound impact. Most relevant to refined products markets is the associated decrease in diesel consumption. Production of diesel and other refined products has actually been increasing. One of the major changes to the refining landscape in China has been around revised regulations of crude import allocation. China has approximately 160 independent refineries. Of these, only select refineries were allocated crude oil imports quotas. An increase in import quotas for independent refiners allows up to 50 million tons per anum of crude to be used.

Declining domestic consumption coupled with increased domestic supply has resulted in large increases in diesel exports regionally.

How much further will imports increase?

In 2009, China became the largest car market in the world. Increased motorization has bought with it massive challenges for China. Air quality has declined in large cities to dangerous levels. Frequently driver numbers are restricted to bring air quality to acceptable levels.

China has a growing electric vehicle fleet. Low cost, domestic production of electric vehicles and government incentives have resulted in an import growth in the sector. China has a very capable domestic technology skillet tuned to the development of new technologies. Ina recent survey by the World Economic Forum, around 75% of poll participants said that they would welcome the use of Autonomous or Self driving vehicles. High-tech Chinese companies like Baidu lave invested in research centers in the United States geared towards the production of Chinese autonomous vehicles.

With large domestic pressures to reduce pollution and improve air quality in big cities will China become a leader in this field?

Nexant Thinking have produced a special report, China’s Refining Industry – The Transforming Giant which willanalyse the impacts of the above issues as well as others. The proposed table of content is as follows:

  1. Executive Summary
  2. Crude Oil Dynamics
  3. Domestic Demand and Supply of Refined Products
  4. Competitiveness of Chinese Refineries
  5. Petrochemical Integration
  6. Future Outlook

Nexant Thinking’s special report will be useful to any commercial entity who is interested in future refined products supply and demand and particularly those with a regional Asian outlook.

To purchase this report please click here

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