Media: China urges refineries to shift focus to petrochemical amid falling fuel demand
Market participants are closely monitoring the policy shift’s impact, particularly its execution across the industry. With state-owned refiners dominating the market, widespread compliance is expected.
China is pushing its refineries to pivot away from fuel production and increase output of petrochemical products, aligning with the nation’s evolving energy landscape, Bloomberg reports. The directive, issued during the third session of the 14th National People’s Congress (NPC), comes as the rapid expansion of electric vehicles (EVs) reshapes domestic consumption patterns for diesel and gasoline.
The move underscores the government’s recognition of a structural decline in traditional fuel demand driven by the transition to EVs. At the same time, demand for high-value petrochemicals continues to rise, reinforcing the sector’s strategic importance.
Market participants are closely monitoring the policy shift’s impact, particularly its execution across the industry. With state-owned refiners dominating the market, widespread compliance is expected. However, independent refiners face additional pressures, grappling with narrowing margins and diminishing tax incentives. Earlier this month, Bloomberg reported that fuel tax rebates in key refining hubs, including Shandong, had been reduced from 100% to 60%, further tightening conditions for the sector.
Written by: Derek Yong