China’s diesel exports are on track to drop in November from the highs seen in August and September as increased fuel shipments at the end of the summer dented domestic inventories, traders and executives with knowledge of this month’s export plans told Reuters on Thursday.
So far this month, Chinese refiners have sold about 500,000 metric tons of diesel for November loading, according to estimates by Reuters and trade sources. Refiners are yet to finalize deals for loading in the second half of November, but early estimates show the diesel shipments could end up at about 800,000 tons this month, down from 1.33 million tons in August and 1.8 million tons in September.
China’s fuel export policies have varied from month to month since the Middle East crisis throttled supply of crude and fuels early this year. Authorities and refiners have prioritized domestic supplies; that’s why China restricted fuel exports between April and July.
Then China’s fuel exports recovered in August as refiners exported 6.01 million tons of petroleum products, up by 12.7% from a year earlier, after Beijing removed in mid-July restrictions on fuel exports that were in place at the peak of the Strait of Hormuz blockage.
The total volume of Chinese fuel exports exceeded pre-war levels in August, with jet fuel exports at an all-time high. Overseas shipments remained strong in September, too. But October saw another pullback in the first part of the month around the week-long Chinese holiday, before a restart of exports around October 9.
China last week expanded the quota for refined product exports, with available export quota for the fourth quarter at 20.44 million tons, up by 44% from a year earlier, China’s GL Consulting said this week.
“However, additional quota headroom does not guarantee an immediate increase in physical exports. Before the latest allocation, China’s November export plan was expected to decline month on month,” GL Consulting analysts said.
“With the new quota in place, an upward revision is possible, although the monthly plan remains under adjustment.”
By Tsvetana Paraskova for Oilprice.com
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