ICIS CHINA OIL MARKET SEMINAR 2017 Big Import and Big Export: China - PowerPoint PPT Presentation

PRESENTATION SLIDES FROM THE CHINA MARKET SEMINAR ON 27 SEPTEMBER 2017 ICIS CHINA OIL MARKET SEMINAR 2017 Big Import and Big Export: China Oil Market’s New Play CHINA’S OIL DEMAND CHINA’S OIL SURPLAS (IMPORT) (EXPORT) - The impact of economics structure - Refining expansion and supply migration and energy policies on oil forecast consumption - Refined products balances - Cleaner energy plan and - Which products will be in surplus in development substitutes China and what are the historical - Opportunities and barriers of China’s and upcoming trends crude imports - Vehicle fuel upgrading plan and demand for blending stocks >> ACCESS THE PRESENTATION SLIDES >> ACCESS THE PRESENTATION SLIDES

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China oil market 2017 Where is the dragon heading? Liao Na Vice President, China, ICIS PRESENTATION SLIDES FROM THE CHINA MARKET SEMINAR ON 27 SEPTEMBER 2017 www.icis.com 4

China’s economic structure migration and impact on petroleum market www.icis.com 5

Migration 1: KPI shifts from quantity to quality Economic growth from aggressive to sustainable Environmental KPI jumps on local officers Speed up elimination of outmoded capacity Drive up product prices Middle-class population reached 200 million by 2015, 20% of total population; and expect to grow up to 700million by 2020 Proactive fiscal policy to support supply-side restructuring www.icis.com 6

GDP growth outlook 8.0% 5.5% 7.0% 6.0% 4.9% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2015 2016 2017E 2018E 2019E 2020E 2021E 2022E 2025E 2030E 2035E 2040E www.icis.com Source: NBS,IMF,ICIS 7

Migration 2: Monetary policy from loose to prudent Central bank survey: 22% of bankers felt tightening while 75% felt moderate The weighted interest rate for RMB loans to financial institutions rose to 5.53% in March, 0.26 point higher MOM Notes financing rate rose for two consecutive quarters, to 4.77% at end of March M2 supply growth slacked since last Nov and reached record-low by end Aug at 8.9% YOY, balancing at 16.5trillion yuan www.icis.com 8

Migration 3: Drivers shifts from industrialization to urbanization 2017 H1: final consumption contributed 63% to GDP growth, capital investment 33%, export less than 4% 57.35% of population lived in cities by 2016; to increase to 60% by 2020 and 70% by 2030 World biggest vehicle production and sales with stable growth of 4-5%; new energy car sales increased 30% www.icis.com 9

China urban agglomeration map www.icis.com 10

Migration 4: momentums shifts from secondary to tertiary 43.1% 50.5% 59% 68% 75% 3rd sector 2nd sector 1st sector 46.8% 40.5% 34% 27% 22% 2010 2015 2020E 2030E 2040E Source: NBS, Academy of Social Sciences, PetoChina Research Institute www.icis.com 11

China’s energy policies and impact on oil consumption www.icis.com 12

Curb on fossil-fuel powered vehicles Brand NEV sales target China strategy Netherlands 2025 400,000 units by 2020; 20-30% of total vehicle sales 1.5m units by 2025, mostly battery would be NEV by 2025 Norway 2025 electric vehicles (BEV) Germany 2030 15-25% of total vehicle sales China made for most models would be NEV by 2025 India 2030 100,000 units in 2017; 15-25% of total vehicle sales Already launched 6 new models California, USA * 2030 would be NEV by 2025 Belgium * 2030 At least 2 models by 2020, and all 13 10-25% of total vehicle sales models would be introduced to China in would be NEV by 2020 Switzerland * 2030 future 2035 ？？ China 2/3 of total vehicle sales would be hybrid electric vehicles (HEV) to make NEV by 2030 up 50% by 2020 UK 2040 HEV and PHEV to account for China made 2 plug-in hybrid electric 70% of total sales by 2050; FCV vehicle (PHEV) models by 2018; to France 2050 and EV to make up 30% promote EV by joint-ventures Sweden * 2050 20% of total vehicle sales would To launch several budget EV models be EV by 2020 Europe * 2050 10% of total vehicle sales would be 2010 2030 2050 300,000 units by 2020 NEV by 2020; to launch 9 NEV models in China * Likely timetables www.icis.com Source: ICIS, company websites 13

China’s car forecast 2018 2019 2016 2017 YOY CAGR Passenger Cars EV HEV growth growth 10.3 bil 1.2 bil yuan 736% 73% 33% yuan Shared 2015-2020E 11% 64% 49% bike* 209mil 28mil users 646% 43% 26% users 2020-2025E 6% 26% 23% 2015 2017 2018 2025-2030E 3% 18% 12% 380 bil 1.8 tril yuan 66 bil yuan 2030-2035E 2% 13% 10% Shared car yuan ** 8 mil 160 mil 37 mil time/yr time/yr 2035-2040E 1% 9% 8% time/yr Source: CAAM Source: *iiMedia Research; **RolandBerger The population of electric vehicles and hybrid electric Rough calculation: shared transportation to replace vehicles is expected to reach 81.2m units and 10.7m 500kt – 1,000kt gasoline demand in 2017, while the units respectively by 2040, posting a CAGR of 23% and impact will grow up to 4mil ton by 2020 18%, respectively. www.icis.com 14

China’s gasoline demand 20,000 Gasoline surplus 250,000 15,000 200,000 10,000 150,000 5,000 100,000 0 50,000 0 (5,000) 2010 2012 2014 2016 2018E 2020E 2022E 2024E 2026E 2028E 2030E 2032E 2034E 2036E 2038E 2040E Source: ICIS Source: ICIS (10,000) China’s gasoline consumption is expected to peak at around 2030 Continual improvement on energy efficiency of vehicles Bike-sharing & car-sharing www.icis.com 15 Development of NEVs

Global gasoline balance Regional Gasoline Balance 100.0 50.0 million tonnes 0.0 -50.0 -100.0 -150.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 North America South & Central America Europe Former USSR Africa Middle East Northeast Asia Asia & Pacific Europe remains the major global supplier of gasoline; Peak gasoline demand in North America expected by early 2020s, with the region turning surplus before 2025 www.icis.com 16

China’s gasoil demand 180,000 160,000 140,000 120,000 100,000 2010 2012 2014 2016 2018E 2020E 2022E 2024E 2026E 2028E 2030E 2032E 2034E 2036E 2038E 2040E Source: ICIS China’s industrial sector shows sings of recovering entering 2017 Power consumption by industrial and manufacturing sectors Growth rate of Industrial value-added Freight traffic of highways www.icis.com 17

Global gas oil balance Regional Gas Oil Balance 250.0 200.0 150.0 100.0 million tonnes 50.0 0.0 -50.0 -100.0 -150.0 -200.0 -250.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 North America South & Central America Europe Former USSR Africa Middle East Northeast Asia Asia & Pacific NE Asia and Former USSR are the key surplus regions in the largely oversupplied market in the short term; IMO implementation in 2020 is however expected to tilt the global balance to deficit again www.icis.com 18

Cleaner energy plan and development of substitutes www.icis.com 19

China’s changing energy mix: less coal, more clean www.icis.com 20

China’s natural gas consumption structure China’s Natural Gas Consumption Structure (2011-2021E) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E Power generation City-gas Industrial/Commercial users Chemical Source: ICIS China www.icis.com 21