CHINA DATA: Clean oil product exports fall 11% to 3.72 mil mt in Sep

China's clean oil product exports retreated 11.2% to 3.72 million mt (1.03 million b/d) in September from the six-month high in August, General Administration of Customs data showed on Oct. 18.

The outflow was expected to hover in October before falling in the rest of the, year amid tight export quota availability, market sources and analysts said.

The September outflows brought the country's total gasoline, gasoil and jet fuel exports to 31.89 million mt (927,000 b/d) in the first three quarters, rising 58% year on year due to the relatively low base in the same period of 2022, GAC data showed.

The volume suggested up to 9.07 million mt (780,000 b/d) of clean product export quotas remaining for Q4 unless more quotas to be allocated, S&P Global Commodity Insights estimated, considering the 39.99 million mt allocation for 2023 and about 800,000 mt of allowances transferred by Sinopec from low sulfur fuel oil to clean oil products.

Meanwhile, more than 170,000 mt jet fuel for bonded bunkering at China's airports in January-September is estimated from imported barrels, which are reported as exports by GAC but not required to use export quota.

No more export quota transfer

"It is unlikely to see more allowances transfer from LSFO to clean oil products, as other LSFO quota holders have been in short of the allowance for rest of the year, and PetroChina is even going to import LSFO cargo for bonded bunkering as no more export quota available for bringing its domestically produced barrels," a Beijing-based source familiar with the issue said.

China issued 14 million mt of LSFO export quotas for 2023, while market sources estimated about 11 million mt (256,000 b/d) has been used in January-September on top of the 800,000 mt transfer, leaving only 2.2 million mt (150,000 b/d) of allowances for Q4.

Looking forward, market sources said the volumes of October ranged from 3.8 million mt to 4.1 million mt, before a slump in November and December, given the remaining quotas.

"The strong outflows are driven by good export margins, leading by gasoil at about Yuan 500/mt ($9.18/b)," a Beijing-based analyst said. "We cannot rule out a possibility of more allocation, even though it is tiny, as the government may adjust policy anytime when it is needed."

Over the first nine months, gasoil exports surged 118% year on year to 10.84 million mt, mirroring the weaker domestic demand growth of the fuel compared with gasoline and jet fuel.

Thanks to reopening from COVID-19 related controls, strong travelling demand has driven up China's transportation fuels consumption for gasoline and jet fuel, while gasoil demand has been weighted by a slow construction sector.

In September, gasoline exports saw the deepest month-on-month decline of 21% to 1.09 million mt, despite a 64.7% jump from the same month of last year.

S&P Global expects gasoline, gasoil and jet fuel exports to increase to above 850,000 b/d this year, from 753,000 b/d in 2022, according to its monthly report dated Sept. 29.

China's clean oil product exports (mil mt)

Notes: * was adjusted according to the % change provided by the GAC.

Source: China's General Administration of Customs