China’s oil Firms to Boost Product Exports Modestly with new Quota Allocation

China’s oil Firms to Boost Product Exports Modestly with new Quota Allocation

China’s oil Firms to Boost Product Exports Modestly with new Quota Allocation

Beijing has released the third batch of oil products export quotas, totalling 2.93 million mt, which will allow the five Chinese state-run oil companies to boost exports modestly from the low levels recorded in September.

The new allocation comprises quotas of 740,000 mt for gasoline, 590,000 mt for gasoil and 1.6 million mt for jet fuel, lifting the total quota allocation in 2018 to 45.93 million mt, market sources said.
The quotas are shared by state-owned companies CNPC, Sinopec, Sinochem, CNOOC and China National Aviation Fuel.

China’s gasoil export volume was down 13.1% year-on-year in September to a 20-month low of 1.03 million mt, the lowest since 965,000 mt in January 2017.

Gasoline outflows were down 42.1% on the month to a 12-month low of 730,000 mt in last month, although the figure was 29.1% higher from 568,000 mt posted a year earlier.

“We expect to see a rebound in November for China’s product exports, while its October outflow is more likely stable from September as the quotas were allocated late in the month,” said a Beijing-based trader.

However, the rebounds are more likely to be modest and will not hit new highs due to the quota availability for October-December remain relatively tight. Availability for gasoline in Q4 was 2.55 million mt and gasoil was 3.48 million.

China’s gasoline and gasoil exports hit record highs in March this year at 1.698 million mt and 2.376 million mt, respectively.

Anticipating the new quota allocation, PetroChina lifted its November export plan earlier this week. PetroChina’s Liaoyang Petrochemical plans to export at least 60,000 mt of gasoil in both November and December, after suspending exports in August and September.

Guangxi Petrochemical also plans to lift its exports in November and December, from around 165,000 mt in September and October. The September-October exports from the refinery were down 45% from its average exports of 300,000 mt/month over January-July 2018, due mainly to the quota shortage.

“We’ll try our best to export more oil products since quotas will not be a problem in the coming two months,” said a refinery source with Guangxi.

Dalian Wepec is also considering lifting exports in November but volumes are not yet fixed, according to a refinery source.

The heavy allocation on jet fuel lifts quota availability for the product to 5.24 million mt for October-December, the highest among all the products.

Half of the new jet fuel quotas were allocated to Sinopec.

The fourth quarter is Asia’s peak season for jet/kerosene consumption with increased travelling during the Christmas and New Year holiday, and heating demand during winter.

“We are increasing jet fuel exports and cut gasoil volume in recent months,” said a source with Sinopec’s Shanghai Petrochemical.

The refiner increased its planned jet fuel exports to 80,000 mt for October from 50,000 mt in September and August, while cutting gasoil exports to 90,000 mt in October and 60,000 mt in November from 120,000 mt in previous months.

The other Sinopec refineries, including Guangzhou Petrochemical and Gaoqiao Petrochemical, are also increasing jet fuel exports while cutting gasoil exports.

China’s jet fuel export quota not only goes to cover seaborne cargo exports but also for barrels used on international flights departing from China.

Sinopec currently holds a total of 10.84 million mt of jet fuel export quota, 9.12 million mt for gasoil, and 1.85 million mt for gasoline.

The company got approval to increase its jet fuel quota by 350,000 mt by reducing its gasoline quota by the same volume.

CNOOC has the deepest shortfall among all the oil companies and the 290,000 mt jet fuel oil quota is unlikely to see its gasoline and gasoil exports move back up to more normal levels in November and December.

The company planned to export an average of 131,000 mt/month of gasoline and 158,000 mt/month gasoil in January-October.

If its exports are fully in line with its plans, CNOOC could have only 110,000 mt of quota available for gasoline in November-December, and no quota for gasoil.

Due to the tight quota, CNOOC has cut it October export plan to 40,000 mt each of gasoline, gasoil and jet fuel.

In November and December, the company was expected to lift jet fuel exports to an average 145,000 mt/month from an average 95,000 mt earlier this year.

Gasoline Gasoil Jet fuel Total
CNPC 470 0 510 980
Sinopec 0 520 790 1,310
Sinochem 270 70 0 340
CNOOC 0 0 290 290
CNAF 0 0 10 10
Total 740 590 1,600 2,930
Unit: ‘000 mt
Source: Market sources
YTD 2018 quotas Jan-Sep 2018 exports Availability for Oct-Dec % Availability
Gasoline 12,520 10,320 2,200 17.6%
Gasoil 17,770 14,290 3,480 19.6%
Jet fuel 15,640 10,400 5,240 33.5%
Total 45,930 35,010 10,920 23.8%
Unit: ‘000 mt

Source : HSN


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