China’s Auto Sales in May: Good for Crude Oil Tanker Industry?
Auto sales in May
In May 2017, auto sales in China fell 0.10% year-over-year to 2.1 million. Automobile sales are a key indicator to watch when assessing China’s economic (FXI) health.
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Auto sales in China have fallen for the second consecutive month. In the first five months of 2017, sales rose 3.7% compared to the previous year. In 2016, they rose 13.7%, mainly due to a 10.0% sales tax cut on small engine vehicles.
Since the beginning of 2017, China’s auto sales have eased since Beijing raised a sales tax on small-engine vehicles. This discouraged buyers from purchasing cars. According to a CAAM (China Association of Automobile Manufacturers) spokesperson, the current downturn in auto sales is expected to continue through July and August. CAAM forecasts 2017 auto sales growth at 5.0%. Slowing growth doesn’t bode well for the crude oil tanker industry.
Auto sales and crude oil tankers
Of China’s total oil demand, ~49.0% comes from road and air transportation. Gasoline demand is closely related to the automobile industry. A rise in auto sales translates to higher oil consumption. An increase in oil demand translates to higher oil imports. We’ve already seen in the previous parts of this series that higher oil imports increase the demand for crude oil tankers. Some of the major crude oil tanker companies are Teekay Tankers (TNK), Frontline (FRO), Tsakos Energy Navigation (TNP), Gener8 Maritime (GNRT), Nordic American Tankers (NAT), DHT Holdings (DHT), Navios Maritime Midstream Partners (NAP), and Euronav (EURN).
Be sure to visit Market Realist’s Crude Tanker page for more key developments in the industry.