China Eases Fuel Export Curbs as Refiners Resume Shipments
China has relaxed export regulations on refined fuel and permitted a private refiner is set to resume shipments following a four-month suspension, according to trade sources on Wednesday, as the world’s largest refiner gradually returns to normalcy after disruptions caused by the Iran war. The resumption of refined fuel exports from one of Asia’s largest exporters follows the interim peace deal between the US and Iran. This development is anticipated to alleviate prices for transport fuels in a region where consumers have been contending with inflation since Beijing restricted shipments to safeguard domestic supplies in March. It may also incentivise state refiners to boost production to take advantage of robust export margins, thereby facilitating a resurgence in oil shipments to China, the leading global importer.
Zhejiang Petrochemical Co has received authorisation to resume fuel exports in July, according to four sources, following a suspension of exports that lasted over three months. China’s Ministry of Commerce and the National Development Reform Commission have yet to provide a response to faxed requests for comment. In recent months, the export of petrol, diesel and jet fuel has been restricted exclusively to state-owned enterprises, which must submit monthly applications for the volumes they wish to export. Refiners are set to export approximately 3 million metric tonnes of the three fuels this month, which includes bonded volumes to Hong Kong and Macau, according to two additional sources. This figure aligns with last year’s average export volume. However, the scheduling of these cargoes remains in progress and is expected to be finalised by the end of this week, they indicated.
Exports were initially projected to reach nearly 2 million tonnes for July, as reported. It remains uncertain whether the removal of export restrictions will persist.In August, two additional sources were incorporated. The interim US-Iran deal had already prompted a surge in Middle Eastern oil exports, which depressed global prices and eased supply concerns. However, this week’s attacks have once again unnerved markets, pushing prices back up. In July, China’s petrol exports are projected to exceed 400,000 metric tonnes, according to one of the two sources, a significant increase from the preliminary plan of just under 40,000 tonnes.
Meanwhile, diesel exports could reach 600,000 to 700,000 tonnes, an increase from approximately 200,000 tonnes previously, while jet fuel outflows may rise to roughly 1.9 million tonnes from 1.5 million tonnes earlier, according to the second source. Export margins for China’s refiners remained lucrative, hovering at 1,000 yuan per tonne or more this week, according to two other trade sources. Refiners are likely to seek to maximise their unused quotas once the export restrictions are lifted, according to analysts. Petrol exports are expected to experience greater growth compared to diesel later this year, as domestic demand is increasingly challenged by the rapid rise in electric vehicle adoption.
