China recorded a year-on-year decline in its gasoline production in June 2019, the first time so far this year, which has also been rarely seen over past years.
The country produced 11.17 million mt of gasoline in June, a decline of 2.3 percent year on year, according to data from the country’s National Bureau of Statistics (NBS). The yield ratio of gasoline was 20.8 percent in June, down from 22.5 percent in May.
The drop was in stark contrast to a 7.7 percent year-on-year rise in China’s crude consumption in June.
The country’s gasoline output amounted 70.36 million mt in January-June 2019, an increase of 2.9 percent from the same period of time in 2018, the NBS data shows. The growth slowed down from a 4.0 percent year-on-year boost in the first five months of this year.
Growth in China’s gasoline production had slowed down since 2018, as the domestic gasoline market is becoming increasingly oversupplied amid slow demand growth. The country’s cars sales began to fall in 2018 as fast upgrading vehicle standards have dampened buying interest and many people have put off their plans to purchase a new car. China is upgrading vehicle emission standards fast, while cars on sale do not meet the new standards that are expected to come into effect in the near future, which has turned many buyers away.
In addition, the use of alternative vehicle fuels, such as electricity and ethanol gasoline, has made a dent in gasoline demand.
Domestic gasoline prices have been relatively weak this year, and they started to settle far below those of diesel in June, reversing the normal price spreads between gasoline and diesel over the years. The prices of 92-RON gasoline were CNY200-350/mt lower than those of zero-pour-point diesel in north, east and south China on July 18, JLC data shows.
The country is likely to boost gasoline exports during the back half of 2019. PetroChina has recently announced a plan to subsidize its subsidiaries for gasoline export, to encourage exports as domestic competition is getting increasingly fierce.