presentation slides from the china market seminar …€¦ · 400,000 units by 2020; 1.5m units by...

ICIS CHINA OIL MARKET SEMINAR 2017Big Import and Big Export: China Oil Market’s New Play

PRESENTATION SLIDES FROM THE CHINA MARKET SEMINAR ON 27 SEPTEMBER 2017

CHINA’S OIL DEMAND (IMPORT)

- The impact of economics structure migration and energy policies on oil consumption

- Cleaner energy plan and development substitutes

- Opportunities and barriers of China’s crude imports

- Vehicle fuel upgrading plan and demand for blending stocks

CHINA’S OIL SURPLAS (EXPORT)

- Refining expansion and supply forecast

- Refined products balances - Which products will be in surplus in

China and what are the historical and upcoming trends

>> ACCESS THE PRESENTATION SLIDES >> ACCESS THE PRESENTATION SLIDES

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ICIS China Oil and Refinery SolutionsWe provide an end-to-end market data solution for China’s dynamic oil market – crude/petroleum, gasoline/naphtha, gasoil and so much more

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CHINA PETROLEUM ANNUAL REPORT CHINA INDEPENDENT REFINERY ANNUAL REPORT

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To support international oil players, ICIS has launched the 2017/2018 version of the China Oil and Refinery Annual Studies.

ICIS China Oil and Refinery Annual Studies CLICK HERE TO ENQUIRE NOW

The annual report captures the development of China’s independent refiners with historical statistics, market research and analysis of the significant issues expected to shape the industry over the next five years.

• Refining units and capacity with regional breakdowns

• Feedstock mix by region plus origin, specification and destination data

• Analysis of margins and operating rates• Storage and transportation facilities used by

independent refiners• The impact of quotas, taxes and policies• The expansion plans and outlook for independent

refiners for 2018-2022

To support both local and international oil players, ICIS publishes a detailed annual study with unparalleled data and analysis including all of the following:

• Critical supply and demand data and analysis for up to five years ahead

• A review of China’s complex refining industry (both state-run and independent) with import and export data

• An in-depth look at the infrastructure operations, capacity, ownership and logistics of China’s oil industry

• Macroeconomics and policy changes and trends • Supplementary maps showing refinery capacities,

pipeline and oil distribution at a glance, as well as data files to give you direct access to raw data from the report


https://www.icis.com/contact/enquire-about-china-oil-refinery-annual-studies/?region=china&channel=energy&commodity=crude-oil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUxhttps://www.icis.com/contact/enquire-about-china-oil-refinery-annual-studies/?region=china&channel=energy&commodity=refining&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUxhttps://www.icis.com/contact/enquire-about-china-oil-refinery-annual-studies/?region=china&channel=energy&commodity=crude-oil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUx

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China oil market 2017Where is the dragon heading?

Liao NaVice President, China, ICIS


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China’s economic structure migration and impact on petroleum market

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Migration 1: KPI shifts from quantity to quality

Economic growth from aggressive to sustainable

Environmental KPI jumps on local officersSpeed up elimination of outmoded capacityDrive up product prices

Middle-class population reached 200 million by 2015, 20% of total population; and expect to grow up to 700million by 2020

Proactive fiscal policy to support supply-side restructuring

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GDP growth outlook

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2015 2016 2017E 2018E 2019E 2020E 2021E 2022E 2025E 2030E 2035E 2040E

Source: NBS,IMF,ICIS

4.9%

5.5%

www.icis.com 8

Migration 2: Monetary policy from loose to prudentCentral bank survey: 22% of bankers felt tightening

while 75% felt moderate

The weighted interest rate for RMB loans to financial institutions rose to 5.53% in March, 0.26 point higher MOM

Notes financing rate rose for two consecutive quarters, to 4.77% at end of March

M2 supply growth slacked since last Nov and reached record-low by end Aug at 8.9% YOY, balancing at 16.5trillion yuan

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Migration 3: Drivers shifts from industrialization to urbanization

2017 H1: final consumption contributed 63% to GDP growth, capital investment 33%, export less than 4%

57.35% of population lived in cities by 2016; to increase to 60% by 2020 and 70% by 2030

World biggest vehicle production and sales with stable growth of 4-5%; new energy car sales increased 30%

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China urban agglomeration map

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Migration 4: momentums shifts from secondary to tertiary

46.8%40.5%

34%27%

22%

43.1% 50.5%59% 68%

75%

2010 2015 2020E 2030E 2040E

3rd sector2nd sector1st sector

Source: NBS, Academy of Social Sciences, PetoChina Research Institute

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China’s energy policies and impact on oil consumption

www.icis.com 13

2025

2025

2030

2030

2030

2030

2030

2035？？

2040

2050

2050

2050

2010 2030 2050

Netherlands

Norway

Germany

India

California, USA *

Belgium *

Switzerland *

China

UK

France

Sweden *

Europe *

Brand NEV sales target China strategy

20-30% of total vehicle sales would be NEV by 2025

400,000 units by 2020;1.5m units by 2025, mostly battery electric vehicles (BEV)

15-25% of total vehicle sales would be NEV by 2025 China made for most models

100,000 units in 2017;15-25% of total vehicle sales would be NEV by 2025

Already launched 6 new models

10-25% of total vehicle sales would be NEV by 2020

At least 2 models by 2020, and all 13 models would be introduced to China in future

2/3 of total vehicle sales would be NEV by 2030

hybrid electric vehicles (HEV) to makeup 50% by 2020

HEV and PHEV to account for 70% of total sales by 2050; FCV and EV to make up 30%

China made 2 plug-in hybrid electric vehicle (PHEV) models by 2018; to promote EV by joint-ventures

20% of total vehicle sales would be EV by 2020 To launch several budget EV models

300,000 units by 202010% of total vehicle sales would be NEV by 2020; to launch 9 NEV models in China

Curb on fossil-fuel powered vehicles

* Likely timetablesSource: ICIS, company websites

www.icis.com 14

China’s car forecast

CAGR Passenger Cars EV HEV

2015-2020E 11% 64% 49%

2020-2025E 6% 26% 23%

2025-2030E 3% 18% 12%

2030-2035E 2% 13% 10%

2035-2040E 1% 9% 8%

The population of electric vehicles and hybrid electric vehicles is expected to reach 81.2m units and 10.7m units respectively by 2040, posting a CAGR of 23% and 18%, respectively.

2016 2017 YOY 2018 growth2019

growth

Shared bike*

1.2 bil yuan 10.3 bilyuan 736% 73% 33%

28mil users 209mil users 646% 43% 26%

2015 2017 2018

Shared car **

66 bil yuan 380 bilyuan1.8 tril yuan

8 miltime/yr 37 mil time/yr

160 mil time/yr

Source: *iiMedia Research; **RolandBergerSource: CAAM

Rough calculation: shared transportation to replace 500kt – 1,000kt gasoline demand in 2017, while the impact will grow up to 4mil ton by 2020

www.icis.com 15

China’s gasoline consumption is expected to peak at around 2030

Continual improvement on energy efficiency of vehicles

Bike-sharing & car-sharing

Development of NEVs

0

50,000

100,000

150,000

200,000

250,000

2010

2012

2014

2016

2018

E20

20E

2022

E20

24E

2026

E20

28E

2030

E20

32E

2034

E20

36E

2038

E20

40E

Source: ICIS (10,000)

(5,000)

0

5,000

10,000

15,000

20,000

Gasoline surplus

Source: ICIS

China’s gasoline demand

www.icis.com 16

Global gasoline balance

-150.0

-100.0

-50.0

0.0

50.0

100.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

mill

ion

tonn

esRegional Gasoline Balance

North America South & Central America Europe Former USSR

Africa Middle East Northeast Asia Asia & Pacific

Europe remains the major global supplier of gasoline;

Peak gasoline demand in North America expected by early 2020s, with the region turning surplus before 2025

www.icis.com 17

China’s gasoil demand

100,000

120,000

140,000

160,000

180,000

2010

2012

2014

2016

2018

E20

20E

2022

E20

24E

2026

E20

28E

2030

E20

32E

2034

E20

36E

2038

E20

40E

Source: ICIS

China’s industrial sector shows sings of recovering entering 2017

Power consumption by industrial and manufacturing sectors

Growth rate of Industrial value-added

Freight traffic of highways

www.icis.com 18

Global gas oil balance

NE Asia and Former USSR are the key surplus regions in the largely oversupplied market in the short term;

IMO implementation in 2020 is however expected to tilt the global balance to deficit again

-250.0

-200.0

-150.0

-100.0

-50.0

0.0

50.0

100.0

150.0

200.0

250.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

mill

ion

tonn

esRegional Gas Oil Balance

North America South & Central America Europe Former USSR

Africa Middle East Northeast Asia Asia & Pacific

www.icis.com 19

Cleaner energy plan and development of substitutes

www.icis.com 20

China’s changing energy mix: less coal, more clean

www.icis.com 21

China’s natural gas consumption structure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E

Power generation City-gas Industrial/Commercial users Chemical

China’s Natural Gas Consumption Structure (2011-2021E)

Source: ICIS China

www.icis.com 22

China’s natural gas demand to see robust growth

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E 2021E

产量净进口量bcm

Status Quo & Forecast of China’s Natural Gas Supply & Demand (2012-2021E)

Source: NBS, ICIS China

♦Note: Non-conventional natural gas is not includedbcm is short for “billion cubic metres”

Output Net imports

www.icis.com 23

Asia is the main hub of global LNG import

LNG import(-mil ton annual)

2015 YOY 2014

Japan 84.5 -5% 89.2S.Korea 33 -12% 37.62China 19.6 3% 18.98

Taiwan 14.4 7% 13.45India 14.7 1% 14.54

Pakistan 0.9 nil -

SE Asia 8.6 37% 6.3

Total 175.7 -2% 180.09

Source: ICIS

World Imported LNG Demand 2015

Asia

Europe

S.America

N.AmericaMiddle East

Asian countries LNG import

www.icis.com 24

Opportunities and barriers of China’s crude import

www.icis.com 25

0

10

20

30

40

50

60

Jan2016

Feb2016

Mar2016

Apr2016

May2016

Jun2016

Jul2016

Aug2016

Sep2016

Oct2016

Nov2016

Dec2016

Jan2017

Feb2017

Mar2017

Apr2017

May2017

Jun2017

Jul2017

Aug2017

Crude throughput Net imports Production

m tonnesStrategic & commercial crude inventory (number of days)*

China replaces US as largest crude oil buyer

Source: NBS, GAC, OGP, ICIS

China’s crude imports in the first eight months of 2017 increased by 12.3% year on year to 281m tonnes

Lower domestic crude production and higher crude throughput of refineries, as well as oil injection into Jinzhou SPR base led to the high imports.

www.icis.com 26

Independents as main contributor in throughput growth

0

10000

20000

30000

40000

50000

60000

2014 2015 2016

Sinopec PetroChinaOther majors Independents

20%

30%

40%

50%

60%

70%

80%

90%

100%

Shandong independentsSinopec & PetroChina

Source: ICIS China

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2016 (Jan-Sept) 2017 (Jan-Sept)

Sinopec PetroChinaOther majors Independents

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

Shandong independentsSinopec & PetroChina

www.icis.com 27

Independents take more shares in throughput

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sinopec PetroChina Other majors IndependentsSource: ICIS China

Environmental audit

Throughput cut by Sinopec

www.icis.com 28

0

1000

2000

3000

4000

5000

6000

7000

8000

2017 YTD crude imports Unused quotas for 2017 Imported crude throughput ceiling Import crude throughput ceiling pending NDRC approval

Unit: '000 tonnes

2016 crude imports Unused quotas for 2016

Crude import by independent refiners

Note: Updated in August 2017Source: ICIS China

www.icis.com 29

0

5

10

15

20

25

30

35

40

45

0.8 0.85 0.9 0.95 1

API

Sulphur

Independents favor medium-sulphur crude for better cost management

Independents’ Crude Imports -by API and SulphurIndependent Refiners’ Crude Imports -by Region

29%

22%22%

14%

9%

2% 2%

South America Russia Africa Middle EastAsia USA Europe

Source: ICIS

www.icis.com 30

Refinery expansion slowing down in China

China’s refinery expansion will slow down. No new refining projects after 2025

Average run rate of Chinese refineries (independent refiners included) will inch up to 70-76% after 2020, which indicates 25-30% oversupply in domestic refining capacity

Crude throughput is expected to rise to over 600m tonnes by 2019 and over 790m tonnes by 2040

62%

64%

66%

68%

70%

72%

74%

76%

78%

0

200

400

600

800

1000

1200

2010

2011

2012

2013

2014

2015

2016

2017

E20

18E

2019

E20

20E

2021

E20

22E

2023

E20

24E

2025

E20

26E

2027

E20

28E

2029

E20

30E

2031

E20

32E

2033

E20

34E

2035

E20

36E

2037

E20

38E

2039

E20

40E

Throughput Capacity Run rate

m tonnes/year

Source: ICIS

CAGR=4.4% CAGR=2.8%CAGR=3.1% CAGR=0.4% CAGR=0%

www.icis.com 31

Near 70% crude would be imported by 2021

50%

55%

60%

65%

70%

4,000

6,000

8,000

10,000

12,000

14,000

2017E 2018E 2019E 2020E 2021E

Domestic output Net imports Dependence on imports

'000 bbl/day

Source: ICIS China

China’s dependence on imported crude is expected to hit further new highs in the coming five years. Import dependence is on course to reach 69% by 2021

www.icis.com 32

Summary of opportunities & challenges

Environment and tax are the sharpest swords on the oil & refining sectors, esp for independent refineriesExcess capacity of most of industries to speed up clearing China is to see a wide increase of general product prices due to higher environmental &

operational costChina’s new economic drivers are: new investment (industrial transformation

investment), new consumption (final consumption) and new export (one-belt-one-road)China to see its oil peak since 2030 whether in sake of cleaner air or state energy

securityInvestment relative to new energy & EP technology will see booming opportunitiesNew demand will come along with anything relative to improve life quality and

experience

www.icis.com 33









• Refining units and capacity with regional breakdowns

• Feedstock mix by region plus origin, specification and destination data





• Critical supply and demand data and analysis for up to five years ahead

• A review of China’s complex refining industry (both state-run and independent) with import and export data

• An in-depth look at the infrastructure operations, capacity, ownership and logistics of China’s oil industry

• Macroeconomics and policy changes and trends • Supplementary maps showing refinery capacities,

pipeline and oil distribution at a glance, as well as data files to give you direct access to raw data from the report


https://www.icis.com/contact/enquire-about-china-oil-refiner-annual-studies/?region=china&channel=energy&commodity=crudeoil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUxhttps://www.icis.com/contact/enquire-about-china-oil-refiner-annual-studies/?region=china&channel=energy&commodity=crudeoil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUxhttps://www.icis.com/contact/enquire-about-china-oil-refiner-annual-studies/?region=china&channel=energy&commodity=crudeoil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUx

www.icis.com 35

China oil market 2017: Hidden force in a confined marketLi LiHead of Asia Oil Analytics, ICIS


www.icis.com 36

2017: Half Off, Half On

www.icis.com 37

Key words in 2017

Research/Forecast Report

Reality

Price War

Private break in

End of Gasoline car???Export Quota

E10

Integrated Jumbo

The rise of

Teapots Strong

excavators indicator

Poor car sales

growth

Excise tax loophole

on blending

HSE “storm”

www.icis.com 38

Gasoline market in 2017

10.4

9.4

10.3

10.5

9.8 9.9

9.6

10.1

9.3

10.3 10.3 10.3

10.8

9.2

10.4

9.6

10.5

10.3

9.6

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC-mil tonnes

Gasoline demand by month in 2016&2017(mil tonnes: NBS)

2016 2017

Weak demand growth• Weak car sales growth• Pressure from Sharing economy

• 400-mil registered users• Million tons of gasoline

saving• Fast growing of public

transportation availability

www.icis.com 39

Gasoil market in 2017

Strong truck sales growthStrong excavator sales growthGood performance in

infrastructure sector15.0

13.6

14.8 14.6 14.5 14.6

14.7

14.4 14.4

15.6

15.3

15.9

15.3

13.8

15.6

14.6

15.2 15.1

14.8

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Gasoil demand by month in 2016&2017(mil tonnes: NBS)

2016 2017

www.icis.com 40

Refining capacity additions in 2017

Yunnan Petrochemical, 260 kbd, Non-integrated, PetroChina(Saudi Aramco showing interests)-showed up in market in August, 2017.

Huizhou Petrochemical, 200 kbd, integrated(CSPC with Shell), CNOOC- to show up in market in October, 2017.

Teapots’ run rates: from 49%（ 2016 ） to 62% YTD （ 2017 ） 2017.

www.icis.com 41

Escalated surplus in 2017

Refinery output growth outpacedmarket demand growth.

Surplus peaked during Q2.

Sinopec started war in north region to defend market share.

45.9

41.5

44.9 44.8 44.2

45.1 45.3 44.3 43.8

47.1

45.8

47.8 47.6

43.1

47.5

44.5 46.6

46.1 45.5 47.1

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Crude throughput by month in 2016&2017(mil tonnes: NBS)

2016 2017

www.icis.com 42

Export market and government intervene

Sudden turn

Pending for teapots

Embarrassing Q2

Restrained rhythm

www.icis.com 43









• Refining units and capacity with regionalbreakdowns

• Feedstock mix by region plus origin, specificationand destination data





• Critical supply and demand data and analysis forup to five years ahead

• A review of China’s complex refining industry (bothstate-run and independent) with import and exportdata

• An in-depth look at the infrastructure operations,capacity, ownership and logistics of China’s oilindustry

• Macroeconomics and policy changes and trends• Supplementary maps showing refinery capacities,

pipeline and oil distribution at a glance, as well asdata files to give you direct access to raw datafrom the report


https://www.icis.com/contact/enquire-about-china-oil-refinery-annual-studies/?region=china&channel=energy&commodity=crude-oil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUxhttps://www.icis.com/contact/enquire-about-china-oil-refinery-annual-studies/?region=china&channel=energy&commodity=refining&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUxhttps://www.icis.com/contact/enquire-about-china-oil-refinery-annual-studies/?region=china&channel=energy&commodity=crude-oil&cmpid=ILC|ENER|CHHNT-2017-GLOBAL-SGC_c1_annualstudieslaunch-freecontent-PDFlinks&sfid=701w0000001SsUx

ICIS CHINA OIL MARKET SEMINAR 2017�Big Import and Big Export: China Oil Market’s New Play ICIS China Oil and Refinery SolutionsICIS China Oil and Refinery Annual Studies China oil market 2017China’s economic structure migration and impact on petroleum market�Migration 1: KPI shifts from quantity to quality GDP growth outlookMigration 2: Monetary policy from loose to prudentMigration 3: Drivers shifts from industrialization to urbanizationChina urban agglomeration mapMigration 4: momentums shifts from secondary to tertiaryChina’s energy policies and impact on oil consumptionCurb on fossil-fuel powered vehiclesChina’s car forecastChina’s gasoline demandGlobal gasoline balanceChina’s gasoil demandGlobal gas oil balanceCleaner energy plan and development of substitutesChina’s changing energy mix: less coal, more cleanChina’s natural gas consumption structureChina’s natural gas demand to see robust growthAsia is the main hub of global LNG importOpportunities and barriers of China’s crude importChina replaces US as largest crude oil buyerIndependents as main contributor in throughput growthIndependents take more shares in throughputCrude import by independent refinersIndependents favor medium-sulphur crude for better cost managementRefinery expansion slowing down in ChinaNear 70% crude would be imported by 2021Summary of opportunities & challengesICIS China Oil and Refinery SolutionsICIS China Oil and Refinery Annual Studies China oil market 2017: �Hidden force in a confined market2017: Half Off, Half OnKey words in 2017Gasoline market in 2017Gasoil market in 2017Refining capacity additions in 2017Escalated surplus in 2017Export market and government interveneICIS China Oil and Refinery SolutionsICIS China Oil and Refinery Annual Studies

presentation slides from the china market seminar …€¦ · 400,000 units by 2020; 1.5m units by...

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