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China oil industry set to rebound in 2015

Hydrocarbon Engineering,

China’s oil industry will rebound in 2015 from the lowest growth this century, according to the ICIS China Petroleum Annual Report. However, rising demand may not be enough to pull some parts of the country’s struggling refining industry out of trouble, and international market participants hoping that Chinese demand will rescue falling oil prices are likely to be disappointed.

The report forecasts that 2015 will see a jump in China’s oil demand growth to 4.1% over the next 12 months, a major leap upwards from 2014’s 1.1% growth. Surging imports of petrochemicals feedstocks naphtha and LPG look set to be the primary drivers of this growth, however, with demand for automotive and industrial fuels still in the doldrums. ICIS forecasts that exports of gasoil will continue to grow, as China shifts its development focus to urbanization (avoiding, for now, the use of diesel cars) and the country’s service industries.

2015 will also see strong growth in Chinese crude oil imports, with net imports up by 7% for the year. The jump, however, is being driven in large measure by a need to fill strategic stocks, and does not reflect underlying actual demand growth. Opportunistically, as international prices fell in late 2014, China has already begun buying large quantities of crude, and will likely complete its Strategic Reserve programme ahead of schedule.

Adapted from a press release by Emma McAleavey.

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