China’s oil demand next year – so vital to the fortunes of the global tanker trades – has been questioned.
The People’s Republic is by far the world’s largest importer of crude oil, its thirst for the commodity reviving solidly throughout 2023 post-covid. The International Energy Agency (IEA) forecasts Chinese oil demand for 2023 to reach 16.29m barrels per day, 1.6m barrels per day higher than in 2022 and 1.2m barrels per day higher than in 2021.
“Chinese oil demand for 2024 is more uncertain, even though economic issues don’t seem to have affected oil demand significantly so far in 2023,” stated the latest weekly report from tanker brokers Poten & Partners.
The IEA takes a cautious approach with an oil demand increase of only 0.6m barrels per day for 2024.
The import patterns of Chinese crude oil are also critically important to the tanker market. This year, data from Poten shows China has used VLCCs for 83% of its seaborne crude imports from countries other than Russia and only 5% on aframaxes. For Chinese imports from Russia the picture was reversed with 63% aframaxes and only 6% VLCCs.
“Imports from Russia seem to have peaked, and China is sourcing more crude oil from the Atlantic Basin,” Poten observed, pointing out that these longer-haul trades from the likes of the US and Brazil will boost ton-mile demand, in particular for VLCCs.
While acknowledging that in 2023, China has been by far the largest support for oil demand growth, tanker experts at broker BRS argue in a new report that heading into next year, as the Chinese economy struggles amid the current crisis unfolding in its property and real estate sectors, there will be a degree of contagion into other sectors which will weigh on oil demand.
This, together with the fact that in 2023, Chinese oil demand received a one-off post-covid boost, will see demand growth slow – according to BRS estimates – from 1.2m barrels per day this year to 700,000 barrels per day next year, a significant slowdown, but one which remains in line with the growth averaged across the past decade.
Regardless of the slowdown, China is still forecast by BRS to account for 50% of global growth in oil demand next year.
