In 2023, China's economy showed a steady recovery and development trend, with the implementation of strategies such as expanding domestic demand and new industrialization, driving the growth of both fossil energy and non-fossil energy consumption. As one of the main forces of fossil energy, when will oil consumption peak? How big is the impact of the rapid development of new energy on oil consumption? What role will oil play in the future?
In order to answer the above questions, Sinopec Economic and technological Research Institute recently released a series of reports entitled "China Energy Outlook 2060 (2024 Edition)". According to the report, China's oil consumption resumed growth after the epidemic, rising to 760 million tons in 2023, reaching a peak of about 800 million tons in the middle of the 15th five-year Plan and falling to 280 million tons by 2060. As the development of new energy vehicles continues to exceed expectations, the peak period of China's oil consumption will be shortened to 3-5 years. Around 2030, the chemical raw material property of petroleum will surpass that of transportation fuel. The special topic of this edition analyzes and forecasts China's oil demand in the future for reference. & nbsp
● oil demand has entered the final stage of growth and is expected to peak in the middle of the 15th five-year Plan, and then accelerate its decline.
The development of ● new energy vehicles is accelerated, and the number of fuel vehicles will reach its peak around 2025, driving the rapid decline of traffic fuel demand after reaching its peak.
The decline of ● transportation fuel oil is the main reason for the decline of oil demand after reaching its peak, and the raw material property of oil is becoming stronger and stronger.
● this round of chemical super expansion cycle is still continuing, driving the growth of medium-and long-term chemical feedstock oil demand, long-term recycling and carbon dioxide recycling technology to promote the decline of chemical feedstock oil.
Oil demand enters the final stage of growth
In 2023, China's primary energy consumption increased by 3.3% over the previous year, reaching 5.59 billion tons of standard coal. China's total energy consumption will peak between 2030 and 2035, with a peak of 6.2 billion tons of standard coal, when non-fossil energy accounts for about 30 per cent. It is estimated that in 2060, China's total energy consumption will fall back to 5.6 billion-5.78 billion tons of standard coal, which is equivalent to that in the later period of the 14th five-year Plan.
As one of the basic energy sources, oil plays an important role in supporting national economic growth and improving people's living standards. China's oil terminal consumption in 2023 is about 760 million tons, with a degree of external dependence of 73.6 percent, accounting for about 18.8 percent of China's primary energy consumption structure. From the perspective of consumption, oil is mainly used in transportation, petrochemical, industrial, construction and civilian use. Under the scenario of coordinated development, China's oil demand is expected to reach a peak of about 800 million tons from 2025 to 2030, with a shorter platform period and a faster downward trend.
In the medium and long term, oil will change from an important transportation fuel to an indispensable petrochemical raw material, and will maintain an important position in China's primary energy for a long time. Petroleum as raw material, the production of ethylene and PX (p-xylene) downstream products are related to all aspects of production and life. At the same time, petrochemical high-end new materials play a key role in the development of new energy industry, such as solar photovoltaic, the most widely used is packaging film, backplane film, involving EVA (vinyl acetate copolymer), POE (polyolefin elastomer), PET (polyethylene terephthalate) and other materials; wind turbine blades also involve a variety of high-end materials such as carbon fiber and epoxy resin. In addition, high-end new materials have played a vital role in the field of energy conservation and environmental protection, such as building energy conservation and photovoltaic buildings.
The development of new energy vehicles is accelerated
In 2023, China's automobile production and sales volume reached 30.161 million and 30.094 million respectively, an increase of 11.6% and 12% over the previous year, a record high. Among them, the production and sales of new energy vehicles completed 9.587 million and 9.495 million respectively, up 35.8% and 37.9% respectively over the previous year, and new car sales reached 31.6% of the total new car sales. By the end of 2023, the number of new energy vehicles in China had reached 20.41 million, accounting for 6.07% of the total. It is estimated that there will be nearly 40 million new energy vehicles in China in 2025, accounting for more than 10% of the total number of vehicles. The rapid development of new energy vehicles has led to the peak of fuel vehicle ownership in advance.
There is still much room for the development of China's automobile industry. In 2023, the number of cars in China is about 340 million, of which the number of passenger cars reaches 190 per thousand people. According to the forecast of authoritative institutions such as the China Automotive Technology Research Center, the saturation value of passenger cars in China is 300,400 vehicles per thousand people, which is still greater than the current growth potential, and China's passenger car sales will continue to grow in the next 10 years. According to the per capita GDP development stage, it is estimated that the number of cars will reach a peak of 450 million in 2040-2050. After 2040, with the gradual popularization of self-driving technology, intelligent travel mode will greatly improve the efficiency of vehicle use, and the number of cars per capita may be reduced. At that time, the total number of vehicles will show a downward trend.
The development of new energy vehicles is much higher than expected. In 2023, the penetration rate of new energy vehicles in some provinces and cities along the south coast of the Middle East has reached 50%. It is estimated that in 2025, the cost of power battery system is expected to drop by nearly 30% compared with the current, passenger cars basically achieve oil and electricity parity, the sales penetration of new energy vehicles is expected to exceed 40%, and the number of new energy vehicles is expected to reach nearly 40 million. Sales penetration is expected to exceed 50 per cent in 2030 and further increase to close to 100 per cent in 2045.
The number of fuel vehicles is about to reach its peak, which will lead to the saturation of traffic oil demand. The number of fuel vehicles in 2023 is about 300 million, and it is expected that the number of fuel vehicles will be maintained at about 300 million in 2023-2030, and there may be only about 10 million incremental space in the future. The demand for transportation fuel is expected to peak at 400 million tons around 2025. Among them, road oil, which accounts for about 80% of transportation oil, is the first to reach the peak under the influence of electrification, and drops rapidly after reaching the peak, and only part of the intercity logistics diesel heavy truck is expected to be retained in 2060.
Four stages of the evolution of oil demand trend
In the past two years, the development speed of new energy vehicles has continuously exceeded expectations, with a penetration rate of 13.2% in 2021 and 25.6% in 2022, reaching the target value of the 14th five-year Plan three years ahead of schedule, 31.6% in 2023, and will further increase to 40% in 2025. The accelerated development of new energy vehicles has led to a decline in the demand for transportation fuel in oil even earlier.
The evolution of the trend of oil demand shows the characteristics of four stages: the current period from 2026 to 2026 is the "peak period", the peak of oil consumption is about 800 million tons, the average annual growth rate is 1%, 2%, "platform" from 2027 to 2030, oil consumption remains at about 800 million tons, and the average annual decline is about 1%. The period from 2031 to 2040 is a slow decline, and the average annual decline rate of oil consumption is about 2%, 2041 and 2060, with an average annual decline rate of 4% and 5%. As it is difficult to fully realize deoiling in the fields of petrochemical and long-distance transportation, there is still a demand of about 280 million tons of oil in 2060.
The peak period (around 2026) will be in the final stage of oil demand growth in the next three to five years, with oil demand growing at an average annual rate of 1% to 2%. With the growth of the number of fuel vehicles, the absolute demand for transportation fuel is still slowly increasing, but the proportion of oil consumption has slowly dropped from 50% to about 48%. At the same time, this period is still in the chemical super expansion cycle, a large number of chemical plants such as ethylene, PX and PDH have been put into production, driving the continuous increase in the consumption of chemical raw materials such as chemical light oil and liquefied petroleum gas, accounting for 28% of oil consumption from 23%.
During the platform period (2027-2030), the oil demand was maintained at about 800 million tons, and the duration was shortened. During this period, the impact of new energy vehicles changed from quantitative change to qualitative change, the number of fuel vehicles reached the peak, the use of transportation fuel decreased slowly, and the proportion of oil consumption decreased to about 44%. At the same time, although the pace of production has slowed down, the downstream chemical plant is still in operation, driving the proportion of oil used in chemical feedstock to 33%.
The slow decline period (2031-2040) is at the double inflection point of the decline in transportation oil and the slowdown in the growth rate of chemical oil, with oil demand falling by an average of about 2% a year. The growth of oil demand for chemical raw materials has reduced the impact of the decline in transportation oil demand on oil demand. During this period, the oil demand for chemical raw materials will exceed the demand for transportation fuel oil, accounting for 44% and 37% of the oil demand respectively.
During the period of rapid decline (2041-2060), China entered the level of moderately developed countries, and the demand for consumer goods was gradually saturated. Coupled with technological breakthroughs such as green hydrogen, recycling and recycling of carbon dioxide, the substitution of oil was significantly accelerated, and the demand for oil declined rapidly. the average annual rate is reduced by 4% to 5%. In 2060, petroleum is mainly used for chemical raw materials, while there is still partial demand for aviation and waterborne oil, and a small amount of road asphalt and lubricating oil demand.
The super capacity expansion cycle of chemical industry is still continuing.
With the liberalization of refining and chemical industry policy and the wave of "oil conversion", the scale of China's chemical industry is growing rapidly and has become the world's largest producer of ethylene and PX. China's ethylene production capacity will reach 52.77 million tons / year in 2023, and 33.57 million tons / year will be added during the 14th five-year Plan period, far exceeding the 19.78 million tons / year production capacity in the past 10 years; PX production capacity in 2023 will be 42.51 million tons / year, and PX capacity will be increased by 19.22 million tons / year during the 14th five-year Plan period, exceeding the 18.15 million tons / year production capacity in the past 10 years. The expansion of downstream devices leads to an increase in the consumption of oil for chemical raw materials.
China's bulk chemical market shows the characteristics of a phased inflection point: first, the epidemic may lead to the repair of China's economy for a long time, coupled with the upgrading of the manufacturing industry, and the demand for some chemical products has shifted to Southeast Asia. In the medium term, the consumption of bulk chemicals has obviously dropped from a high growth rate of 8% to 10% to a medium-speed growth rate of 3% and 4%. Second, the investment rhythm of chemical plants does not match the changes of terminal consumption, and the largest expansion wave of chemical plants in Chinese history that began after 2020 may continue to the middle and later period of the 15th five-year Plan, resulting in an overall surplus of general chemicals. The gap of chemical light oil will continue to expand, and integrated enterprises need to speed up process optimization and resource planning. The petrochemical industry has stepped into the era of "low cost + high added value + green" comprehensive competitiveness from economies of scale in the past.
The saturation of ethylene equivalent consumption may come around 2035. From a macro point of view, in the medium to long term, China's economy is in a period of medium-to-fast growth of 3% to 5%. From an industrial point of view, policies such as "carbon barriers" have forced the rapid development of plastic recycling technology, international trade disputes have led to the gradual extension of industrial transfer from labor-intensive to capital-intensive, and China's real estate industry has entered a renewal and replacement period from a golden expansion period. According to a comprehensive judgment, it is estimated that China's ethylene equivalent consumption will be 82 million-90 million tons around 2035 (580.65 kg per capita, compared with 43 kg per capita at present).
Rely on recycling and carbon dioxide recycling technology to reduce the use of chemical oil. At present, the recovery rate of plastics in China is about 30%, all of which are physical recovery. It is expected to be 45% to 50% in 2030, subject to the immature chemical recovery technology, most of which are still physical recovery. It will be increased to 70%-80% in 2060, with physical and chemical recovery routes accounting for half of the total. In September 2023, Shenghong Sinopec 100000 tons / year "carbon dioxide capture and utilization-green methanol-new energy materials" project was put into production, carbon dioxide resource utilization technology is moving towards industrialization. However, the high cost of green hydrogen is a key constraint. The price of green hydrogen needs to be reduced to less than 5000 yuan / ton, or the price of carbon sequestration needs to be raised to 600 yuan / ton. Source: Sinopec Daily