Apr 18 2022
China's gasoil, gasoline and jet fuel exports fell 52.7% in the first quarter from the same period of 2021, amid a steep reduction in export quota allocations, data released April 18 by the General Administration of Customs showed.
Combined exports of the three key oil products amounted to 6.12 million mt, accounting for 47% of the total quotas allocated in the first batch for 2022, leaving 6.88 million mt available.
Beijing is set to cut the country's oil product exports by slashing gasoline, gasoil and jet export allocations in the first batch of quotas for 2022 by 56% year on year to 13 million mt.
The remaining quotas are likely to only sustain for a quarter if the outflows are stable from current levels, analysts said.
"We haven't heard that there will be a second batch of export quota allocation yet," a source with Norinco's Huajin refinery said. The refinery in Q1 has used up its quotas of 150,000 mt that were allocated in the first batch.
Meanwhile, refinery sources from PetroChina and Sinopec revealed that they have limited quotas left and have still been waiting for further notice on quota allocations for the next round.
A senior economist with Sinopec called for increasing quota allocation to offset stock pressure on refineries as domestic demand falls, with Beijing's zero-tolerance approach to controlling the coronavirus slowing economic activities and mobility.
S&P Global Commodity Insights' Platts Analytics expects China to witness oil demand destruction of over 1 million b/d in both March and April, and nearly 600,000 b/d in May from its original forecast due to the movement curbs.
In the report dated March 16, it reduced the demand forecast by 650,000 b/d for March and 400,000 b/d for April. "The main loss was attributed to gasoline and jet fuel due to the travel suspension," Platts Analytics said in the report.
Due to limited quota availability, exports in Q2 are more or less stable from Q1, forcing refineries to cut throughput amid high feedstock costs.
In March, the country's gasoil exports jumped 239.8% to a six-month high of 670,000 mt in March from a multi-year low of 197,000 mt in February, reflecting weak demand in the domestic market.
With export margins becoming more attractive in March, China's oil companies have adjusted their export plans from around 500,000 mt initially, and sent more gasoil cargoes abroad, according to refinery sources.
However, overall gasoil exports in the first quarter remained 82.7% lower at 1.08 million mt compared to 6.2 million mt a year ago, GAC data showed.
Meanwhile, gasoline exports rebounded to a nine-month high of 1.16 million mt in March, which was more than double the initial estimation of about 550,000 mt, the data showed.
Demand for gasoline has been mostly hit by movement controls and high product prices, a refinery source said, adding that stocks of gasoline were the highest among all oil products.
Market sources estimate China's gasoline exports in April to be at 1 million-1.1 million mt. But due to quota shortage, gasoline exports of 3.05 million mt in Q1 remained 40.2% below the level in the same month in 2021.
Jet fuel was the only product to witness a year-on-year increase in exports amid muted domestic consumption because of COVID-19-related controls and resurgent demand for international flights overseas. Outflows in March rose 7.2% year on year to 770,000 mt in March, and jumped 25.2% to 1.99 million mt in Q1, according to GAC data.
China's key oil products exports ('000 mt)
Source: General Administration of Customs
Notes: * was adjusted according to the % change provided by the GAC