Poten: China showing worrying economic signals for tanker trade

Sinopec acting chairman Ma Yongsheng told a seminar in Beijing that the country’s largest refiner would accelerate a transition to increased use of oil for petrochemical manufacturing and use lower-carbon feedstocks in the manufacturing process.

The two-pronged shift means, Mr Yongsheng said, a likely peak of Chinese oil consumption in 2026 at a level of 16M barrels per day (b/d) that is, Poten pointed out, just 1M b/d higher than IEA estimates for Chinese oil consumption in 2021.

Chinese refining remains on a growth curve, with at least an additional 1.4M b/d in capacity set to come online by 2024. But a reversal of China’s policy toward its independent ’teapot’ refineries that make up more than a third of China’s current refining capacity and that have driven much of the country’s oil import growth in the last five years is taking a toll on import volumes.

"Recently, the government has limited quota allocations and increased taxation, which squeezed the margins of the teapots, forcing rationalisation and consolidation. For tanker owners, this also means [lower] import volumes," Poten said.

Despite plenty of life and growth for the next five years, ultimately, the economic signals emanating from China’s energy sector mean the tanker owners who supply it are working on borrowed time, according to Poten.

"It appears that the days of rapid, unbridled growth are behind us," the report said. "It is unlikely that there are many other countries waiting in the wings to step in and provide a boost to tonne-mile demand, and the tanker market needs to carefully manage vessel supply to enable the industry to return to profitability."

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