China product markets long-term outlook H1 2020

China (excluding Hong Kong) was deficit in LPG, naphtha and fuel oil and surplus in gasoline, jet fuel and diesel/gasoil in 2019. Oil product demand in China (excluding Hong Kong) has grown over the past decade to 13.16 million b/d in 2019. However, due to the Covid-19 crisis in 2020, we expect a year-on-year decline of 2.5% (or 333,000 b/d) for China's oil product demand in 2020. Transport oil demand has been hit the worst while petrochemical feedstock remains strong. The recovery of liquid demand is accelerating since April 2020 when restrictions have been eased. But we expect the total demand will not return to the pre-crisis levels until Q3 2020, mainly due to the slow recovery of jet fuel demand. Looking ahead, oil product demand in China is forecast to peak in 16.75 million b/d in 2031 and reach 16.3 million b/d in 2040. The outlook is based on average annual GDP growth of 4.2% between 2020 and 2040, which is materially lower than average growth of 8% in the preceding decade.