MNI INTERVIEW: China Crude Imports Set To Fall Under Tariffs

China’s crude oil imports are expected to fall ​0.3% y/y in 2025, as rising trade tensions sap downstream demand, while an expansion in the nation’s petrochemical industry grows overall throughput, a government energy advisor told MNI.

Imports are expected to reach 551 million metric tonnes this year, down from 553 million metric tonnes in 2024, marking the second year of consecutive decline, said Liao Na, founder at GL Consulting and advisor to the National Development and Reform Commission. Liao, who revised the import estimate down from 0.1% growth following the outbreak of tariff escalation between the world’s two largest economies, said the trade war harmed refiners' confidence to build inventories, further suppressing inbound shipments. 

However, Sinopec's increased crude oil processing will support throughput growth of 1.5% y/y to 725 million metric tonnes nationwide, Liao said. Processing growth also depends on Yulong Petrochemical’s ​new 400,000 barrels per day facility entering service later in the year, as well as expected incremental runs from SOEs, such as Zhenhai and CNOOC’s Daxie Petrochem, she added. 

Stronger state sector appetite should slightly outweigh falling consumption at independent "teapot" refiners, which account for about 15-17% of the market and were increasingly constrained by margin pressures and feedstock constraints, continued Liao, who is also vice president at Mysteel OilChem.

Sanctions drove a 5.1% drop in import demand during January and February after U.S. measures inflated costs of Russian and Iranian crude, causing teapots to cut back on demand, she highlighted.

“Shandong province's port ban of U.S. sanctioned tankers on Jan. 7 further tightened input-stock for independents,” Liao continued, noting imports improved to a 1.5% drop during the first three months of the year, despite several independents remaining offline or at reduced capacity.

FUEL DOWN

Following the imposition of U.S. tariffs, gasoline demand was expected to fall 3.1% y/y in 2025, reaching 159 million tonnes, a 0.4 percentage point drop from the pre-tariff forecast, Liao said. 

Additionally, government electric-vehicle (EV) subsidies were accelerating the decline in gasoline consumption, with the updated policy now extended to the replacement of moderate emission internal combustion engine vehicles versus only higher emitters previously, she explained. “EV sales penetration level should reach 55% this year, up from 48% in 2024,” Liao noted.

Diesel consumption would likely decline 6.2% in 2025 to 192 million tonnes, down 0.6pp on the pre-trade war forecast, given less logistics activity in the export sector and faster LNG substitution among heavy-duty trucks, Liao continued. “Domestic LNG output is on the rise leading to stable prices and allowing cost advantage over diesel to be maintained,” Liao noted. However, expected central government stimulus support for heavy infrastructure will partly offset the diesel decline, she argued.

China’s steel rebar futures are likely to be supported for the rest of the seasonal consumption peak period by expectations for additional pro-growth policies, local analysts recently told MNI. (See MNI: Expectations For China Stimulus To Underpin)