Cementing its status as Asia's most pivotal oil market actor that will increasingly dominate the region's fuel trade, China is on pace to overtake the United States as the world's biggest oil importer this year.
Government statistics showed that China imported more crude oil in the first half of the year than the U.S. for the first time.
The fact that the center of gravity in global oil markets is shifting from West to East is highlighted by this shift. Now the world's biggest physical oil trader is the Chinese state-run oil trader Unipec. A crucial role in setting the global price of the commodity, especially as the crude futures market in Shanghai develops, will now be played by China by drawing more of the world's oil to its shores, the second-biggest oil consumer after the U.S.
The expansion of its refinery capacity is the driver of China's import surge. But China's exports of gasoline and diesel have climbed to record highs as the domestic demand has not materialized to soak up the fuel supply. Diesel profit margins have been depressed to multi-year lows in 2016 and headaches for competitors across Asia has been caused by this flood of products.
"China is putting a lot of pressure on the traditional export hubs of Taiwan, Korea and Singapore to capture the market share within Southeast Asia and Australia," said Joe Willis, senior research analyst, Asia refining, at energy consultancy Wood Mackenzie.
It is anticipated that continuance of the trend of more refining capacity and higher exports will happen.
According to a recent presentation from China Petroleum & Chemical Corp, or Sinopec, China plans to add at least 2.5 million bpd of refining capacity by 2020. Sinopec is Asia's biggest oil refiner and the parent of Unipec.
Moving jet fuel from Singapore to northwest Europe in June for the first time in several years, Unipec is leading the way in targeting new overseas markets. Meanwhile, Chinan shipped diesel to Kenya for the first time this year and its diesel shipments in 2017 have more than more than quadrupled to Italy and doubled to France.
The most affected by the Chinese competition will be export-oriented refiners in Singapore, South Korea and Taiwan.
"We're trying to diversify and find new markets by increasing the number of our customers in existing countries," a South Korean refining source said, declining to be named as he was not authorized to speak with the media.
"It's affecting Korean refiners as we are having one more player in the market."
Less affected will be Japanese and Indian refiners.
Japan has bene left behind as Asia's biggest oil consumer by China and India. Because of the increasing use of alternative fuels in the power and transportation sector has cut oil consumption and because of a falling population, Japanese refiners are consolidating capacity.
Meanwhile, focusing on meeting soaring domestic demand are Indian refiners.
In producing fuels for countries with stringent fuel standards such as Australia, China's new modern refineries are competing with the region's exporters. Diesel exports to Australia are on pace to touch the 850,000 tonnes in 2016 which was a seven-fold rise.
(Source:www.reuters.com)
Government statistics showed that China imported more crude oil in the first half of the year than the U.S. for the first time.
The fact that the center of gravity in global oil markets is shifting from West to East is highlighted by this shift. Now the world's biggest physical oil trader is the Chinese state-run oil trader Unipec. A crucial role in setting the global price of the commodity, especially as the crude futures market in Shanghai develops, will now be played by China by drawing more of the world's oil to its shores, the second-biggest oil consumer after the U.S.
The expansion of its refinery capacity is the driver of China's import surge. But China's exports of gasoline and diesel have climbed to record highs as the domestic demand has not materialized to soak up the fuel supply. Diesel profit margins have been depressed to multi-year lows in 2016 and headaches for competitors across Asia has been caused by this flood of products.
"China is putting a lot of pressure on the traditional export hubs of Taiwan, Korea and Singapore to capture the market share within Southeast Asia and Australia," said Joe Willis, senior research analyst, Asia refining, at energy consultancy Wood Mackenzie.
It is anticipated that continuance of the trend of more refining capacity and higher exports will happen.
According to a recent presentation from China Petroleum & Chemical Corp, or Sinopec, China plans to add at least 2.5 million bpd of refining capacity by 2020. Sinopec is Asia's biggest oil refiner and the parent of Unipec.
Moving jet fuel from Singapore to northwest Europe in June for the first time in several years, Unipec is leading the way in targeting new overseas markets. Meanwhile, Chinan shipped diesel to Kenya for the first time this year and its diesel shipments in 2017 have more than more than quadrupled to Italy and doubled to France.
The most affected by the Chinese competition will be export-oriented refiners in Singapore, South Korea and Taiwan.
"We're trying to diversify and find new markets by increasing the number of our customers in existing countries," a South Korean refining source said, declining to be named as he was not authorized to speak with the media.
"It's affecting Korean refiners as we are having one more player in the market."
Less affected will be Japanese and Indian refiners.
Japan has bene left behind as Asia's biggest oil consumer by China and India. Because of the increasing use of alternative fuels in the power and transportation sector has cut oil consumption and because of a falling population, Japanese refiners are consolidating capacity.
Meanwhile, focusing on meeting soaring domestic demand are Indian refiners.
In producing fuels for countries with stringent fuel standards such as Australia, China's new modern refineries are competing with the region's exporters. Diesel exports to Australia are on pace to touch the 850,000 tonnes in 2016 which was a seven-fold rise.
(Source:www.reuters.com)
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