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China has increased its fuel export quotas by as much as 46% for the first batch of 2023 allocations compared to the first batch of 2022, consultancies based in China told Reuters on Tuesday.
Chinese authorities have approved exports of gasoline, diesel, and jet fuel of 18.99 million tons—an increase of 46% over the 13 million tons of fuel export quotas China allocated in the first batch for 2022 as authorities seek to keep refining output high amid sluggish domestic demand.
The biggest Chinese state-held refiners, as well as large private refiner Zhejiang Petrochemical Corp, received most of the fuel export quotas, according to China-based consultancies JLC and Longzhong.
Zhejiang Petrochemical and state-run China Petrochemical Corporation (Sinopec), China National Petroleum Corporation (CNPC), China National Offshore Oil Company (CNOOC), and Sinochem Group were allocated a total of 18.73 million tons of the export quotas.
At the end of last year, despite lukewarm domestic demand, Chinese refiners were boosting production and exports to profit from high diesel margins in a very tight global market. The refiners had the biggest batch of fuel export quotas issued for 2022 by authorities. China allocated 15 million tons of new fuel export quotas to its major refiners at the end of September.
The latest batch of fuel export quotas signals China’s willingness to continue supporting refinery throughput and capturing good refining margins in Asia while domestic demand is weak—and set for possibly weaker performance in the coming weeks and months due to the rapidly rising number of Covid cases now that China has abandoned its ‘zero Covid’ policy.
“It will take a while before consumption comes back given the current COVID situation,” a trader told Reuters.
The Chinese economy is off to a difficult start to 2023, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), told the CBS program Face the Nation in an interview aired on Sunday.
“For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative. The impact on the region would be negative. The impact on global growth would be negative,” the head of the IMF told CBS.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com