At the end of the last year, China decreased its oil imports by 2%. In 2023, the supplies made 11.3 mbpd, and in 2024 – 11.1 mbpd. According to the PRC General Administration of Customs, Russia and China remain the key suppliers, Malaysia, Iraq and the United Arab Emirates (UAE) also belong to the top five.

Along with the imported volumes, the utilization of the Chinese refining capacity also decreased: in 2023, the total refining output including the feedstock produced in China was 14.8 mbpd, and in 2024 – 14.2 mbpd. The slowdown of the demand in the transportation sector could be the key driver. According to OPEC, the demand for motor gasoline in the PRC in December 2024 decreased by 3.4%, and the demand for diesel fuel – by 0.9%.

Electrification of cars and gasification of trucks played a certain role. According to the Chinese Association of Car Manufacturers, the sales of e-vehicles, hybrids and fuel cell vehicles in 2024 grew by 35.5% (up to 12.9 mln vehicles), and their share in the total sales of all vehicles grew from 35.7% in 2023 up to 45.7% in 2024. In the next several years, this share will exceed 50%, partly due to customs duties for importing Chinese e-vehicles into the US and Europe: trade restrictions will be pushing Chinese suppliers to further shake-out of internal combustion engines from the domestic market.

In its turn, the growth of gas production in China to a certain extent impacts the level of trucks gasification, and similarly – gradual return of global gas prices to the multiyear standards. According to some open sources, sales of LNG-fueled trucks in China at the end of the first nine months of 2024 grew by 40% YoY, and their share in total sales of new trucks reached one third.

The ongoing growth of coal-fired power generation was key to this dynamic. China’s National Bureau of Statistics reports that the power output of thermal power plants (TPPs) in the country increased by 1.5% in 2024, reaching 6.34 trillion kilowatt-hours (kWh). The overall share of TPPs, including gas- and oil-fired power plants, in China’s energy mix rose to 67%. According to Global Energy Monitor, a total of 30.5 GW of coal-fired TPPs was launched across China in 2024, with a mere 13.5 GW of coal-fired capacity brought into operation in the rest of the world.

The launch of new capacities is meant to, among other things, reduce the environmental footprint of coal-fired power generation. By the end of 2024, precisely one-third of the capacity of China’s operating coal-fired TPPs was represented by the so-called ultra-supercritical coal-fired TPPs, which help save coal during power generation thanks to their high efficiency (44–46%). Meanwhile, the share of ultra-supercritical TPPs among those under construction reached 96%, while that of subcritical power plants, the least eco-friendly type of TPP with an efficiency of 33–37%, fell to zero.

Due to the crisis in the real estate market, China’s steel production contracted by 1.7% last year (to a little over 1 billion tons). Nevertheless, imports of coking coal, which is used in metallurgy, climbed by 20% in 2024 (to 122.1 million tons). Mongolia has been the largest supplier of coking coal to the Chinese market for the fourth consecutive year, its exports to China going up by 5% (to 56.8 million tons) in 2024. The availability of transport infrastructure is a major factor: in 2022, Mongolia completed the construction of a railway line from the Tavan Tolgoi coal mine in the south of the country to the border with China.

Import growth is supported by the policy of increasing commercial coal reserves, which China has been implementing since 2021, when a number of domestic coal-fired power plants faced a feedstock shortage amid rising energy demand. Under current regulations, the level of commercial reserves must reach at least 15% of demand. Since China’s overall coal consumption exceeded 4,900 million tons last year (as reported by the IEA), this is above the annual volume of imports.

However, China’s coal imports are bound to stabilize in the coming years, both due to the large-scale launch of renewable energy facilities and nuclear power plants, as well as the development of domestic coal mining: according to the IEA, investments in coal mining in the country skyrocketed by 65% to $100 billion ​​between 2017 and 2023 (no later data are available).

In November 2024, the overall petroleum products consumption in China grew by 90 kbpd (thousand barrels per day) YoY and achieved 16.67 mbpd. However, the dynamics of the demand has different vectors for different petroleum products: according to OPEC, the demand for diesel fuel grew by 140 kbpd, and for kerosene-type jet fuel – by 80 kbpd, while as the consumption of gasoline decreased by 70 kbpd.

Such decrease of the demand for gasoline to a great extent is connected with e-vehicles expansion. According to the Chinese Association of Automotive Manufacturers (CAAM), the sales of e-cars, hybrids and FCEVs (fuel cell electric vehicles) in 2024 grew by 35.5% achieving 12.9 mln vehicles. The share of vehicles using new types of energy sources in the sales profile for all types of cars in the end of the preceding year was 40.9%. Moreover, in December 2024, this share was as high as 45.7% (vs 35.7% YoY).

The glut of e-cars partially is associated with availability of the resources required for energy storage in China. According to the International Energy Agency (IEA), in 2023, the PRC accounted for more than 60% of global supply of the processed lithium, 80% of the processed cobalt and almost 100% of the processed graphite. The fact that China does not have “big history” in the traditional car manufacturing is another factor: it stipulates Chinese companies to generate innovations in the new sectors of transport.

The slowdown of the demand for gasoline in the PRC also is associated with the overall slowdown of Chinese economy. According to the general evaluation of the IMF, the GDP growth in China slowed down from 5.2% in 2023 to 4.8% in 2024, and at the end of 2024 it will be “only” 4.6%. And last but not least, there is such factor as slowdown of the demographic increase: according to the World Bank, the total population in the PRC in 2024 was the same as in 2023 (1,411 mln people), while as in India it grew by 2% (up to 1,429 mln people) over the same period.

De-facto it means that the manufacturers of both traditional cars (internal combustion engine cars) and of e-vehicles are competing for the stagnating market. That is why the e-vehicles expansion leads to decrease of the demand for automotive gasoline and overall slowdown of the demand for oil.