Oversupply of refining capacity, a long-term issue for China

The oversupply China’s oil refining sector will be a long-term issue, given that the addition of fresh refining capacities in the coming years will overrun China’s demand growth. In 2010, newly added refining capacity in China is expected to reach 30.50 million metric tons, an increase of more than 10%, while demand may grow only by some 6%. China’s oil products demand growth has entered a stagnant period since the beginning of 2009 and in the short term, there seems to be no new growth points to spur demand. This suggests that exports will be one of the outlets for easing oversupply in China. (August 6, 2010)