China’s clean oil product exports rose 58% month on month and 36.9% year on year to a 14-month high of 4.55 million mt (1.25 million b/d) in March, General Administration of Customs data showed April 18, as most market participants returned from the Lunar New Year holidays.
The exports were last higher at 5.07 million mt in January 2023.
Refining sources said that the volume in April could be capped during the maintenance season despite healthy export margins.
March exports brought the country’s total gasoline, diesel and jet fuel outflows to 10.16 million mt (887,000 b/d) in the first quarter, falling 21.2% year on year, GAC data showed.
The volume suggested about 8.84 million of clean product export quotas remaining until the next allocation round, after 19 million mt had been awarded in January.
Serval sources with state-owned quota holders told S&P Global Commodity Insights that they have applied for new export quotas, which could be allocated in late April or early May, with the volume expected to be as much as 18 million mt.
However, the sources said the new allocation will not affect their export pace immediately as they expected the total quota for 2024 to be unchanged from 2023 at about 40 million mt, although the government could allocate all quotas earlier than last year to provide oil firms more flexibility with their export plans.
April outflows seen falling
In April, PetroChina’s three refineries in northeastern China, including Dalian Petrochemical, which has shut down for maintenance, cut their combined gasoline exports by 71% from March to about 71,000 mt, according to company sources.
“We expect exports in April to decrease from the level seen in March due to maintenance at state-run and mega independent refineries but higher than the volumes in January and February,” said Minmin Hu, associate director, downstream research and analysis, S&P Global Commodity Insights.
The volume is expected to fall even as the monthly export margin for 92 RON gasoline rose to $8.35/b as of April 17, from an average $7.96/b in March, while that for 10 ppm diesel increased to $8.91/b, from an average of $7.4/b in last month, S&P Global Commodity Insights data showed.
Chinese oil companies are required to prioritize supplies to meet domestic demand rather than capture export margins.
Diesel to lead
Strong export margins for diesel are likely to encourage exporters to increase barrel proportions of the product in combined outflows to maximize margins, trade sources said.
Gasoil exports recorded the strongest month-on-month growth of 125.4% to 1.42 million mt (389,000 b/d) in March among clean oil products, GAC data showed.
In the first quarter, diesel exports slumped 55.9% year on year to 2.64 million mt due to weak volumes in January and February.
Gasoline exports are expected to fall to 700,000-80,000 mt in April, from 1.15 million mt in March, trade sources said. They also attributed a strong rebound in March to logistical recovery following the Lunar New Year holidays and higher production in the month.
Source: Platts
