CHINA DATA: Jan-Apr key product exports slump 51.7% on year to 8.6 mil mt

China's gasoil, gasoline and jet fuel exports over January-April collectively slumped by 51.7% from a year earlier to 8.59 million mt despite weak domestic demand, as tight export quota availability limited outflows, data released by the General Administration of Customs on May 18 showed.

With only 4.41 million mt of export quotas remaining for May onwards until the next round of quota allocations, exports are expected to remain low, keeping supply in the Asian market tight, market sources said.

Moreover, market sources are expecting the second round of quotas to be fairly low, at around 2-3 million mt, when they are issued in June. Last year, the second batch of quotas was allocated at 7.5 million mt in August.

Beijing decided to reduce oil product exports this year in order to meet emissions reduction targets, slashing the first batch of quotas for 2022 by 56% year on year to 13 million mt.

A trader with a Chinese state-owned oil company said the lack of quota availability was "the real, hardcore issue" limiting exports, although he also mentioned high freights and difficulties for chartering clean tankers.

Looking ahead, a source with a major Sinopec refinery in eastern China said: "We have no plan to export any oil products in both May/June, although the export margins have been quite good."

China's refiners did boost exports of MTBE -- a blending component for producing gasoline – over the first four months of the year due to the strong demand in overseas market. MTBE exports are not subject to quotas and are consumption tax-free while value-added tax is refundable, according to Chinese sources.

Jet exports hit 2-year high

Jet fuel was the only one of the three key products to record an increase in exports, hitting a two-year high of 960,000 mt in April -- the highest since 2.03 million mt was exported in April 2020 -- as Chinese companies focused their limited export quotas more on the aviation fuel.

Exports jumped 46.4% year on year in April despite a 55.6% drop in domestic production, GAC data showed, reflecting muted domestic consumption amid tight COVID-19 controls and strong demand from overseas.

For the first four months of the year, jet fuel exports rose by 31.4% year on year to 2.96 million mt.

"After two years of coping with the pandemic, a growing number of Asian governments have begun to treat COVID-19 as endemic, as high vaccination levels are achieved in parallel," the Association of Asia-Pacific Airlines' director general Subhas Menon said.

Asia-Pacific carriers flew 3.5 million international passengers in March, up from 1.2 million passengers a year earlier, AAPA data showed.

For gasoline, exports totaled 980,000 mt in April, 15.4% lower from March and slightly below market expectations of 1 million-1.1 million mt. January-April exports were down 38.7% year on year to 4.02 million mt.

Chinese gasoline exports are expected to dip further in May, as many refiners were heard stockpiling gasoline and gasoline blending components ahead of the lifting of COVID-19 restrictions in Shanghai, market sources said.

Shanghai on May 16 announced plans to fully resume daily activity in three phases by late June.

Gasoil exports declined 21.2% on the month to 530,000 mt in April, from a six-month high of 673,000 mt in March, GAC data showed.

For the first four months, gasoil exports were the lowest among the three key oil products at 1.61 million mt, slumping 83% from 8.97 million mt in January-April 2021.

Market sources expect that trend to continue as China will need more gasoil barrels domestically because the government is taking steps to boost infrastructure construction to sustain economic growth.

China's key oil products exports ('000 mt)

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

Source: General Administration of Customs