NEV boom prompts calls for refined petrochem exports

Company executives and industry experts are advocating for the gradual easing of refined oil and chemical export restrictions, amid the rapid adoption of new energy vehicles nationwide.

They also proposed a measured relaxation of export controls on refined oil products and tax-free chemical exports through coordinated policy support.

In light of China's evolving energy landscape and the rapid adoption of NEVs, Ma Yongsheng, chairman of China Petroleum and Chemical Corp, also known as Sinopec, suggested steadily advancing the gradual relaxation of export restrictions on refined oil and tax-free chemical products during the 15th Five-Year Plan (2026-30) period.

"Exporting refined oil is beneficial for adjusting the flexibility of refining capacity and enhancing emergency security capabilities, as NEVs and traditional fuel vehicles have entered a new stage of competitive coexistence and development in China," Ma said.

In 2024, the domestic penetration rate of NEVs reached 41 percent and is expected to surpass 50 percent in 2025, becoming a major force in the growth of the auto market.

China's road transport fuel use, including gasoline and diesel, has entered a phase of decline, said the Economics and Technology Research Institute under China National Petroleum Corp.

The institute expects that by 2030, consumption will drop to between 344 and 310 million metric tons, a reduction of 12 to 20 percent compared to 2024.

Ma said that over the long term, reducing oil production while increasing chemical output — as well as focusing more on specialized products — will remain the prevailing trends.

He called for a coordinated and orderly approach to determining the scale and pace of this transition, underscoring the necessity of top-level design and scientific advances to ensure that the transformation aligns with market supply, while simultaneously achieving quality and efficiency improvements.

"China's consumption of gasoline and diesel has reached its peak ahead of global trends, leading to a decline in demand and reduced pressure on domestic supply. Easing export restrictions on refined oil products could serve as a flexible mechanism to adjust refining capacity and enhance emergency response capabilities," he said.

Ma added that in 2024, domestic consumption of refined oil was 400 million tons, a decrease of 1.9 percent compared to 2023, due to the accelerated replacement of traditional energy with renewable sources alongside economic structural transformation in China.

Despite the decline in demand for refined oil consumption, demand for high-end chemical products and specialty materials is expected to keep growing in the coming years, he said.

Industry experts suggest that as China has been stepping up efforts to stabilize and strengthen its economy, chemical companies should step up efforts in high-end chemical products and specialty materials.

A significant influx of investments has targeted expanding scale and increasing output in the past few years in the country, leading to overcapacity in some sectors. However, a very limited proportion of such investments were allocated to structural optimization and high-end advancements, resulting in the current overcapacity situation, said Fu Xiangsheng, vice-president of the China Petroleum and Chemical Industry Association.

It is necessary for the industry to prioritize structural optimization and increased investments in high-end development rather than solely focusing on expanding scale, he said.

Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, said Chinese petrochemical firms' pivot toward high-end chemicals will be one of the primary reasons for their improved profit prospects in 2025.

The association believes China's petrochemical sector will bolster profits this year, marking a key turning point after a period of challenges.

Driven by a rebound in global oil prices, rising domestic demand and strong government support, China's petrochemical sector bottomed out and stabilized last year, and is on track for recovery, it said.