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Summary of China Oil Data Digest - April 2025 Industry Overview - The report focuses on the oil industry in China, summarizing supply, apparent demand, and trade data for April 2025. Key Points Apparent Demand and Supply - Chinese apparent oil demand decreased by 410 thousand barrels per day (kb/d) year-on-year (YoY) in April, primarily due to refinery maintenance impacting product supply and leading to a rapid build-up of crude stocks [2][5][11] - Apparent diesel demand fell by 110 kb/d month-on-month (MoM) and was down 9% YoY, aligning with weakening manufacturing PMIs [11][18] - Apparent gasoline demand dropped 13% YoY to 3.16 million barrels per day (mb/d), with a 150 kb/d decrease from March [21][27] - Jet fuel demand weakened sharply, falling by 145 kb/d MoM and 19% YoY, although total flight numbers increased slightly [30][36] Crude Imports and Exports - Chinese crude imports softened in April but still reached a seasonal record of 11.7 mb/d, with a 370 kb/d MoM decrease but an increase of 830 kb/d YoY [3][7][58] - Imports of Iranian oil fell by 530 kb/d MoM due to increased caution among refiners following US sanctions [3][60] - Strong imports from Russia and Brazil were noted, as Chinese refiners opted for cheaper grades amid high premiums for Middle Eastern crude [3][61] Refinery Operations - Refinery throughput dropped sharply by 740 kb/d MoM due to intensified seasonal maintenance, particularly at Sinopec [4][65] - Independent refiners increased utilization rates to a 14-week high of 47.5% to capitalize on stronger domestic margins [4][132] - Overall, refinery runs were down 180 kb/d YoY, marking the second consecutive month of decline [126][130] Product Exports and Imports - Refined product net exports weakened in April, driven by tighter supply and weak export margins, leading refiners to retain more supply domestically [5][73] - LPG imports increased by 140 kb/d MoM, reaching an all-time high for April, as buyers stocked up amid rising US-China trade tensions [40][78] - Naphtha imports are expected to strengthen in May and June due to increased attractiveness as a feedstock following high tariffs on LPG [49][50] Economic and Trade Context - The manufacturing PMI index fell to 49.0 in April, indicating contraction and reflecting the impact of US-China trade tensions [8][11] - The overall outlook for Chinese trade remains gloomy, with export growth expected to decelerate to 0% for 2025 [13][12] - The Chinese government released a second batch of clean product export quotas for 2025, totaling 12.8 million tons, slightly down from the previous year [98][101] Inventory Changes - China's crude stocks built rapidly, adding approximately 36 million barrels in April, while observable product inventories drew by 7.1 million barrels [158][165] - Diesel stocks drew by 4.0 million barrels, and gasoline stocks drew by 3.1 million barrels, driven by healthy demand for public holiday travel [159][163] Future Outlook - The YoY reduction in diesel demand is expected to widen further as the negative effects of tariffs on domestic manufacturing continue [16] - Despite a high level of refinery outages in April, which supported margins, a weakening outlook for demand is anticipated in the second half of 2025 [115][125] Additional Insights - The report highlights the significant impact of geopolitical factors, such as US sanctions and trade tensions, on China's oil demand and supply dynamics [12][60][136] - The shift in crude sourcing from Middle Eastern suppliers to Russian and Brazilian grades indicates a strategic response to pricing pressures and sanctions [61][64] This summary encapsulates the critical data and insights from the April 2025 oil data digest, providing a comprehensive overview of the current state and future outlook of the Chinese oil industry.

Investment Rating - The report does not explicitly provide an investment rating for the industry but discusses the implications of tariffs on natural gas liquids (NGLs) and their flows, particularly ethane and propane, in the context of US-China trade relations [5][17]. Core Insights - US tariffs on China plastics and reciprocal tariffs from China threaten to disrupt global NGL flows, particularly affecting ethane and propane, which are key petrochemical feedstocks [2][5]. - China’s NGL imports from the US have surged from below 50 thousand barrels per day (kb/d) in 2019 to nearly 900 kb/d in 2024, with a significant dependency on US ethane and propane [2][13]. - The report anticipates a moderate decline in US ethane flows to China due to lower US production and reduced demand from China, which may lead to a decrease in Henry Hub prices [2][26]. - Propane flows are easier to redirect compared to ethane, but full substitution of US propane exports will be challenging, necessitating deeper price discounts to attract buyers [2][3]. Summary by Sections Tariff Implications - US tariffs on energy imports are currently exempt, but significant tariffs on plastics threaten NGL flows [5][6]. - The reciprocal 125% tariff imposed by China on US imports is expected to skew the tariff burden towards the US over time [2][31]. Ethane and Propane Market Dynamics - Ethane imports from the US are critical for China, accounting for 60% of US ethane exports, while propane accounts for one-third [17][20]. - Ethane's specialized shipping and processing infrastructure complicate redirection efforts, while propane can be redirected more easily [3][20]. - The report outlines potential adjustment mechanisms for both ethane and propane markets in response to tariffs, highlighting the challenges and likelihood of each mechanism [20][25]. Production and Pricing Outlook - The report predicts a decline in US ethane and propane production due to tariff impacts and market adjustments, with potential price declines for both commodities [26][57]. - US ethane prices have already dropped by 25% since early April, while propane prices have decreased by 20% following tariff announcements [57][58]. - The long-term outlook suggests that lower US NGL production may offset some tariff impacts on petrochemical demand in China [2][60].