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China’s Fuel Exports Forecast To Hit Highest Level Since April 2020

Chinese refiners are widely expected to ramp up crude throughput and exports in November to capture high diesel margins and external demand, with total fuel exports forecast to be the highest since the start of the pandemic in April 2020.

China could export this month as much as 6 million tons of refined petroleum products, including diesel, gasoline, and jet fuel, according to consultants Wood Mackenzie, Refinitiv, and JLC cited by Reuters.

In September, increased fuel export quotas and robust export demand pushed China’s overseas shipments of refined products surging by 36% annually, to the highest level since June last year, official Chinese data showed in October. The fuel export data for October is expected to be released on November 15.

Refinery output in China was up by 1.9% in September compared to the same month in 2021, and stood at around 13.82 million bpd. That was much higher than the refinery production of 12.64 million bpd in August 2022.

Data about refinery runs in October is due out next week, but according to senior analyst Daphne Ho at Wood Mackenzie, China’s crude throughput could be as high as 14.4 million bpd in November. 

Despite lukewarm domestic demand due to the COVID lockdowns, Chinese refiners are boosting production and exports to profit from high diesel margins in a very tight global market. The refiners now have the biggest batch of fuel export quotas issued for this year by authorities. China allocated 15 million tons of new fuel export quotas to its major refiners at the end of September, and the quota could be rolled over into early next year.

According to Reuters’ sources at major Chinese refiners, the facilities are preparing to boost runs.

“Gasoline demand is not good but diesel inventories are thin. So the mandate from the headquarters is to boost diesel production to supply the domestic market and also to raise exports,” a source at Sinopec, Asia’s biggest refiner, told Reuters.   


By Michael Kern for Oilprice.com

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