Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Chinese oil industry**, specifically discussing supply, demand, and trade data for June 2025. Core Insights and Arguments 1. **Apparent Demand Growth**: Chinese apparent oil demand grew by **5% YoY** in June, returning to the top of the 5-year range, driven by strong demand for naphtha, jet fuel, and diesel [2][3][6]. 2. **Crude Imports Surge**: Crude imports increased by **1.2 mb/d** in June, with significant contributions from Saudi Arabia (+52% MoM) and Iran (+88% MoM) [4][54][55]. 3. **Refinery Throughput**: Refinery throughput rose sharply by **1.2 mb/d** to **15.2 mb/d**, marking a record for June runs as state-owned refiners exited seasonal maintenance [5][61][62]. 4. **Refined Products Exports**: Exports of refined products increased by **260 kb/d MoM**, with gasoline exports rising due to better margins compared to diesel [6][70]. 5. **Diesel Demand Recovery**: Apparent diesel demand saw a **3% YoY** increase, marking the first month of positive growth since November 2024, supported by logistics sector demand [12][16]. 6. **Gasoline Demand Decline**: Apparent gasoline demand decreased by **8% YoY** in 1H 2025, attributed to the displacement by new energy vehicles (NEVs) [20][23]. 7. **Jet Fuel Demand Growth**: Jet fuel demand rose significantly by **11% YoY**, driven by increased international travel and supportive government policies [28][29][33]. 8. **Naphtha Demand Spike**: Naphtha demand surged by **23% YoY**, reaching an all-time record due to the high import tax on US LPG, making naphtha a more attractive feedstock [46][49]. 9. **Crude Production Increase**: Chinese crude production increased by **80 kb/d MoM**, reflecting seasonal trends and new field startups [52][54]. 10. **Inventory Levels**: Crude stocks built by **13.5 million barrels** in June, reaching record levels, driven by high imports and increased refinery runs [159][160]. Additional Important Insights 1. **Impact of Tariffs**: The US-China tariff situation has led to significant shifts in import patterns, particularly affecting LPG and naphtha [41][43][79]. 2. **Independent Refiners' Challenges**: Independent refiners faced declining utilization rates due to worsening margins and a shortage of crude import quotas [132][137]. 3. **Future Outlook**: The outlook for diesel demand may weaken as export rushes fade, and the end of the harvest season approaches [16][14]. 4. **Government Policies**: New supportive government policies for the aviation industry are expected to sustain jet fuel demand during the summer [33][35]. 5. **Long-term Trends**: Anti-involution policies may threaten the existence of smaller independent refiners, potentially leading to industry consolidation [138][139]. This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the Chinese oil industry.

Investment Rating - The report does not explicitly state an investment rating for the oil industry in China Core Insights - Chinese apparent oil demand showed year-on-year growth for the first time in three months, increasing by 160 thousand barrels per day (kb/d) to 15.9 million barrels per day (mb/d) in May, driven by strong demand for petrochemicals and travel fuels during the Labour Day holiday [3][6] - Crude imports fell by 720 kb/d month-on-month (MoM) and 90 kb/d year-on-year (YoY) in May, attributed to peak refinery maintenance and high inventory levels [52][61] - Refinery throughput decreased by 200 kb/d MoM, with offline capacity reaching 2.1 mb/d due to maintenance at major state-owned refiners [5][64] - Diesel demand weakened, falling by 60 kb/d MoM and 220 kb/d YoY, influenced by the penetration of new energy vehicles (NEVs) and a struggling real estate sector [12][15] - Jet fuel demand rose by 55 kb/d MoM, supported by increased travel during the Labour Day holiday, although it was down 120 kb/d YoY [26][34] Summary by Sections Supply and Demand - Chinese apparent oil demand increased by 1% YoY in May, with strong naphtha demand as refiners replaced US LPG and ethane imports [3][6] - Crude imports softened further in May, with Iranian crude imports dropping by 40% MoM due to sanctions risk and high inventory levels [4][53] - Refinery throughput fell by 200 kb/d MoM, with all major state-owned refiners offline during peak maintenance [5][64] Product Exports and Imports - Refined product net exports weakened in May, with diesel exports reduced due to strong domestic margins [6][67] - Total product exports fell by 180 kb/d MoM and 220 kb/d YoY, driven by lower gasoline and fuel oil exports [68][93] - LPG imports decreased by 230 kb/d MoM due to a 125% tariff on US LPG, which was later reduced to 10% [76][41] Inventory Data - Crude stocks built rapidly in May, adding approximately 33 million barrels due to low refinery demand [156] - Observable product inventories drew by around 20 million barrels in May, with significant draws in diesel and gasoline stocks [157][161] Refining Data - Gasoline cracks averaged $14.0/bbl in May, down $2.0/bbl from April, while diesel cracks rose to $21.4/bbl [112][113] - Refinery output of diesel and gasoline declined in May, with jet fuel output increasing due to higher demand [141][147] Trade Quotas - China has released two batches of clean product export quotas for 2025, totaling 31.8 million tons, slightly lower YoY [98][100] - The allocation of quotas primarily favors state-owned companies, with Sinopec and PetroChina receiving about 72% of available quotas [98][100]