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PetroChina started to give its subsidiaries subsidies to export gasoline each month as the domestic supply glut is worsening amid increased production, market sources said.
Domestic gasoline supply increased after Hengli Petrochemical saw its refining complex coming on stream at the end of 2018. Hengli and Zhejiang Petrochemical, which put its refining complex into production at the beginning of 2019, could produce much more gasoline than diesel on lower gasoline and diesel output ratios.
China's gasoline output was about 59.13 million mt in the first five months of 2019, up by 1.85 million mt or 3.23% from the same period last year; meanwhile, diesel output dropped by 6.59 million mt or 8.87% to 67.73 million mt.
Domestic gasoline demand growth, however, slowed down since 2018, when automobile sales posted negative increases and did not improve in 2019. The demand was also affected by the fast development of new energy vehicles.
During January-May 2019, China's gasoline exports amounted to 5.78 million mt, down by 7.5% year on year.
In May, domestic wholesale gasoline prices even fell below those of diesel.
The supply glut may further worsen after Zhejiang Petrochemical starts to supply gasoline in the second half of this year.
However, PetroChina's subsidiary refiners may be cautious in exporting gasoline, as export prices may be lower than their costs.
PetroChina continued to subsidize diesel exports but changed the subsidy period from quarterly to monthly.
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