note: we haven't yet seen the demand destruction, these are forecasts and the Chinese are doing everything they can to keep their economy moving forward, to the point they appear to be quietly abandoning the "zero-covid" policy by reopening Shenzhen. It is a very dynamic situation dependent on what the Communist Party/government prioritizes and subject to re-analysis on a week-to-week basis. For now, something to be aware of.
From S&P Global Platts, March 21:
Oil demand and container freight rates are among the casualties in the latest COVID-19 outbreak that has sent various cities in China in lockdown. The EU's ambitious goal to be energy independent from Russia, oil and gas sector earnings, and methanol contract price negotiation sin Europe are also in focus.
....1. Resurgent COVID dampens China oil demand outlook...
What's happening? The omicron variant's spread in China has accelerated with domestic (excluding Hong Kong) cases surging to over 2,000 per day in mid-March. Restrictions on movement are widely implemented in cities across 20 provinces and municipalities with quasi-lockdowns. Guangdong, Shandong, and Shanghai, which are among the epicenters of the coronavirus outbreaks this time, accounted for more than 27% of China's oil consumption in 2021. Additionally, rising oil price is another factor that will potentially constrain China's oil demand growth.
What's next? Movement restrictions will likely moderate in May once this round of virus outbreak is contained. The imminent threat of fuel costs may not be as severe as that of COVID-19 restrictions, as regulated retail prices would alleviate end-user pressure, and price elasticity of demand is getting lower for residents in developed regions of China. Altogether, S&P Global Commodity Insights expects China to see oil demand destruction of 650,000 b/d and 400,000 b/d respectively in March and April, and has lowered expected demand growth for 2022 by 200,000 b/d, down to 350,000 b/d....
....MUCH MORE
