China’s domestic fuel demand is weakening amidst COVID restrictions and the downturn in the property market. As a result, domestic refinery runs have declined by record margins over the past three months. Beijing limited fuel exports to reduce domestic emissions and pollution levels, and then extended these restrictions following Russia’s invasion of Ukraine to maintain domestic supplies and ensure low and stable energy costs for industry and manufacturing in the face of volatile global prices. Continued weakness in demand is likely to keep refinery output and crude imports declining for the remainder of the year. But China’s recent withdrawal from Asian and global export markets for refined products also appears unsustainable.
