Demystifying China’s gasoline balances
Between 2008 and 2018, China’s gasoline demand doubled, from 1.5 mb/d to 3 mb/d, with gasoline alone accounting for over a third of the country’s total product demand growth. This was closely related to rising incomes and the phenomenal growth of China’s private car fleet. As a result, Chinese refiners and global markets are expecting the next stage of China’s economic restructuring, and therefore oil demand, to be an era dominated by light ends. And while government plans to support higher incomes and the related growth in the domestic car fleet bode well for gasoline consumption, demand growth could slow materially from past rates. This is because of the government’s policies to curb local air pollution; its ambitions to become a technological leader in electric vehicles as well as changes in mobility, related to the development of the electric vehicle (EV) industry in China. But while China’s gasoline demand growth could come in lower than market expectations, its domestic production capacity continues to grow. What is more, official data likely understates domestic supplies, given the challenges in accurately assessing blending of mixed aromatics and methanol into the gasoline pool. This paper aims to unpack China’s gasoline balances by looking at both supply and demand dynamics before discussing refiners’ appetite to increase exports and the regulatory framework underpinning these trade flows.