China's crude oil imports have drastically decreased, hitting an eight-year low of 7.8 million barrels per day in May, primarily due to the ongoing Middle East conflict. This decline, which amounted to 4.8 million barrels per day from February to May, is more severe than the drop experienced during the pandemic.
However, JPMorgan's analysis suggests that about 3 million barrels per day of this decline is temporary, with expectations for a rebound in demand as the chemical sector recovers and China looks to replenish its strategic petroleum reserves. The bank has adjusted its forecasts for gasoline and diesel consumption in China, predicting annual declines of 6% and 4%, respectively, through 2030.
Among the beneficiaries of the anticipated recovery in oil demand, JPMorgan highlights PetroChina, projecting a first-half dividend of 0.27 yuan per share, yielding 6.4% for its Hong Kong-listed shares.
Additionally, the bank favors Taiwanese Nan Ya Plastics for its potential growth in advanced materials and identifies LG Chem as a laggard play benefiting from lower oil prices and rising demand for energy storage.
The report also notes that China's refined oil product exports could significantly increase if the government lifts its ban on exports, which is contingent on domestic supply assessments and international crude flow stability