Key product exports slump to 4-month low of 1.77 million mt in May

China’s gasoil, gasoline and jet fuel exports in May dropped to a four-month low of 1.77 million mt or 465.580 b/d, data released by the General Administration of Customs June 18 showed, due to tight availability of export quotas during the same month.

The volume represented a 52.8% year-on-year slump and a 28.3% month-on-month decline, with GAC data also showing that the previous low was 1.64 million mt in January.

The country’s oil product exports collectively plunged by 51.9% on the year to 10.35 million mt in January-May, leaving 2.65 million mt of quotas for June onward.

“The low exports amid high domestic inventory and hefty export margins reflect oil firm’s cautious, leaving quotas to cover a monthly volume, and suggested the difficulty of asking for more permits,” a Singapore-based analyst said.

Beijing in early June released 4.5 million mt of export quotas as its supplementary allowance for the first batch, lifting the availability to 7.15 million mt for June onward.

With the new allocation, China’s outflows in June are estimated to rise to above 3 million mt from the planned outflows of above 2 million mt initially. However, the estimated June exports are still about 36% below year on year.

The Chinese government is set to ensure domestic supply by lowering the country’s oil product exports despite strong demand in Asia and hefty exporting margins, estimated at $30/b for gasoline and $40/b for gasoil by analysts, S&P Global Commodity Insights reported previously.

Gasoil outflows hit multi-year low

The low outflow in May was mainly due to the multi-year low gasoil exports of 120,000 mt (28,839 b/d), which slumped 92.7% year on year and 77.4% from April, GAC data showed.

The previous low was 115,000 mt in February 2015.

“Low quota availability forced oil firms to cut gasoil exports as the barrel has less inventory pressure than gasoline. And for the May exports, gasoil margin was only slightly higher than that of gasoline,” a Beijing-based analyst said.

As a result, the country’s gasoil exports dropped 83.7% year on year to 1.73 million mt (85,354 b/d) in January-May,

In June, Chinese oil firms are likely to stick to the strategy of keeping gasoil exports lower than gasoline despite the new quota allocation, analysts said June 20.

Analysts estimate June gasoil exports to be around 800,000 mt, compared with up to 1.4 million mt (397,000 b/d) of gasoline, which will help ease inventory burden of the light end.

In May, the Chinese oil firms also cut gasoline exports by 14.3% from April to 840,000 mt, a nine-month low, amid quota shortage. This brought gasoline exports to decline 40% on the year to 4.86 million mt in the first five months, GAC data showed.

Jet fuel exports rise 43% on year

Jet fuel was still the only product among the three key oil products to record a year-on-year increase in exports in May due to sluggish domestic demand amid tight movement controls against COVID-19.

The outflows of 810,000 mt (206,419 b/d) in May represented an increase of 42.6% from last year despite a 15.6% fall from the two-year high of 960,000 mt in April.

For the first five months of the year, jet fuel exports also registered a 33.7% year-on-year jump to 3.76 million mt.

However, market sources expected jet fuel cargo exports unlikely to see a significant rise in June amid low domestic output, although the Chinese government in late May issued measures to boost aviation demand.

China’s jet fuel exports comprise cargoes sent overseas and the barrels used for refueling its international airports.

In May, jet fuel exported by cargoes amounted to 603,310 mt, up 3.1% on the month.

Meanwhile, domestic output of jet fuel dropped 64.8% on the month to 1.52 million mt in May, reflecting a 10-year low, according to official data. The last low was registered in October 2011 at 1.49 million mt.
Source: Platts