CHINA DATA: Nov oil product exports rebound 25% on month ahead of rebate cuts

Chinese companies accelerated clean oil products exports in the second half of November ahead of an increase in tax on exports, driving a 24.6% rebound in volumes from the 18-month low in October and leaving lower quotas available for December.

Gasoline, gasoil and jet fuel exports amounted to 3.24 million mt (918,000 b/d) in November, according to data published Dec. 18 by the General Administration of Customs. This was 27.6% higher than the 2.54 million mt forecast for November at the end of October, before a reduction in the value-added tax rebate on exports.

The government announced Nov. 15 a reduction in the VAT rebate for exporting gasoline, gasoil and jet fuel to 9% from 13%, effective Dec. 1, in a move that adds $3-4/b to the cost of clean oil product exports.

Following the announcement companies sought to maximize clean product exports over the balance of the month, led by top gasoline exporter PetroChina, market sources said.

Gasoline exports surged 88.1% to a 15-month high of 1.26 million mt in November, from a six-month low of 670,000 mt in October, GAC data showed.

It was the highest monthly volume since exports reached 1.38 million mt in August 2023. Initial estimates of gasoline exports for November were about 800,000 mt.

The strong rebound was also attributed to firming gasoline export margins, which rose to $10.13/b in November from $9.75/b in October and just $2.45/b in September, according to S&P Globsl Commodity Insights estimates.

Use more quotas than actual exports

Commodity Insights also estimates oil companies had used more than 37.84 million mt of government-allocated export quotas over January-November, despite the latest GAC data showing outflows in the first 11 months amounted to 34.7 million mt.

Based on this estimate, companies have less than 3.16 million mt of export quotas available for December, out of a total of 41 million mt allocated for 2024.

However, market sources are expecting only around 2.15 million mt of clean oil product exports in December amid thinner margins and tight quota availability.

This is because refineries have used more quotas to send jet fuel barrels to bonded storages at China's international airports, in addition to cargo exports sent directly overseas. But GAC's export data only reflects barrels used to refuel outbound aircraft from the bonded storages and the cargo outflows.

"Inventories of bonded jet fuel were high across the country, much more than the actual refueling volumes in the [international] airports. Refineries strive to increase their jet fuel exports, which is the most profitable barrel among the clean products," a source with Sinopec refinery told Commodity Insights.

China's jet fuel price changes in line with a monthly average of Mean of Platts Singapore assessments with a set premium to cover freight, insurance, taxes and fees. Platts is part of Commodity Insights.

Commodity Insights estimates oil companies used around 1.78 million mt of quotas to send jet fuel barrels directly overseas and to bonded tanks, higher than the 1.58 million mt figure for exports released by GAC, with about 200,000 mt remaining at airports awaiting use for refueling.

In the first 11 months of the year, GAC data showed China's jet fuel exports gained 23.1% to 17.63 million mt, making jet fuel the only clean product to register year-on-year growth.

China's clean oil product exports (million mt)