Reduced domestic inventories will likely result in significantly lower Chinese exports of diesel in November amid the global diesel crisis, analysts at Energy Aspects say as they slashed their estimates of Chinese shipments this month.
Energy Aspects now sees China’s diesel exports at about 580,000 tons in November, down by 400,000 tons from the previous assessment, according to a note carried by Bloomberg.
However, there could be upward revisions to the new forecast as refiners may ramp up shipments if domestic demand starts to drop off in the middle of November, as currently expected, the energy consultancy said.
Weakening export margins of diesel in recent weeks may also weigh on Chinese refiners’ exports this month, according Energy Aspects.
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 earlier this week.
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.
Despite commercial refined product inventories slumping to their lowest level in nearly seven years, China is unlikely to suspend diesel exports nationwide in November, GL Consulting, a think tank under Mysteel Group, said in a Thursday note, commenting on reports of cancelled diesel export cargoes and revisions to shipment plans.
Improved crude feedstock availability, flexibility in refinery operations, and limited domestic demand growth could help ease supply constraints and actually boost China’s total refined product exports in November from October, “even if some diesel cargoes are cancelled or rescheduled,” analysts at GL Consulting said.
By Michael Kern for Oilprice.com
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