China exported 1.12 million tons of gasoline last month, which was a whopping 97.4% increase from the year before, customs data cited by Reuters showed.
The increase came on the back of a new batch of fuel export quotas amid lukewarm domestic demand. The new quotas also pushed diesel exports much higher, up by almost 52% from August 2021 at 830,000 tonnes.
The new quotas, issued in June and July, were expected to lift fuel exports substantially in August, with total gasoline, diesel, and jet fuel exports expected to hit between 2.4 and 2.6 million tons, according to an earlier Reuters report.
Exports of fuels for the full year, however, are expected to be much lower than in 2021 because of the smaller size of export quotas as Beijing tackles domestic fuel inflation. In fact, 2022 fuel exports are set to be 40% lower than fuel exports in 2021.
Data for the first eight months of the year shows a more than 30% decline in gasoline exports and a 78.3% drop in diesel fuel exports. Jet fuel exports inched up by 4.4% between January and August.
The diesel fuel export drop might be a cause for worry in global fuel markets as global diesel supply has tightened quite considerably. It is about to tighten further from next February when an EU embargo on Russian fuels will come into effect.
China is the only country in the world with the refining capacity to boost diesel output substantially, but export quotas are being held under tight control by Beijing, limiting its ability to utilize this capacity to alleviate the global diesel shortage.
"China also has the power to change the fate of the global diesel market, if it were to ease off the brakes on rationalizing its domestic refining industry," Vortexa Chief Economist David Wech wrote at the end of August.
By Charles Kennedy for Oilprice.com
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