economy
China to return as major oil buyer in August, JPMorgan says, naming its top stock picks
The pullback in oil imports by the world's largest oil importer has helped absorb the global energy shock and cap the surge in oil prices since the war began.
TL;DR
- China's crude oil imports are expected to recover from August after falling to their lowest level in eight years.
- The decline in imports between February and May was 4.8 million barrels per day, steeper than during the pandemic.
- JPMorgan estimates that about 3 mbd of the demand decline is temporary, with recovery expected from August.
- JPMorgan has lowered its outlook for China's gasoline and diesel consumption, forecasting annual declines of 6% and 4% respectively through 2030.
- PetroChina is named as JPMorgan's top pick to benefit from China's recovering oil demand.
- Nan Ya Plastics is favored in the chemicals sector, with potential upside from advanced materials for AI servers.
- LG Chem is identified as a laggard play in the petrochemical sector, benefiting from lower oil prices and energy storage demand.
- China's decision to lift the ban on refined fuel exports will depend on domestic supply availability and Hormuz flows.