China issued another large quota for fuel exports as refiners look to offset peaking domestic demand with more sales overseas.
(Bloomberg) — China issued another large quota for fuel exports as refiners look to offset peaking domestic demand with more sales overseas.
Seven refiners and traders received permission to export 12 million tons of gasoline, diesel and jet fuel in the third allocation for 2023, according to industry consultants JLC and OilChem. That’s higher than market expectations of 10 millions tons and takes the total awarded so far this year above 2022’s level.
The Ministry of Commerce, which oversees the allocations, didn’t immediately respond to a faxed request for comment.
The quota coincides with a possible peak in China’s downstream oil demand this year. The circumstances of the award are similar to late last year, when a bumper quota was allocated to help the refining sector sustain economic growth. The latest issuance takes the total so far in 2023 to 39.99 million tons.
The nation is coping with a crisis in its property sector and weaker exports, which are throttling consumption of industrial fuels like diesel. Faster adoption of electric vehicles in China is also hindering gasoline demand.
A ramp-up in new refining capacity, led by PetroChina Co.’s Guangdong complex, is likely to add to a domestic surplus of oil products and trigger more exports.
Five of the seven companies also got allocations to export 3 million tons of low-sulfur fuel oil, according to JLC.
Chinese plants are expected to speed up their September exports to make up for lower volumes and margins in August, according to Energy Aspects Ltd. Sales of gasoline, diesel and jet fuel are likely to jump 15% to 3.7 million tons, it said.
–With assistance from Elizabeth Low and Alfred Cang.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.