China lifts fuel export curbs for July, sources say

[SINGAPORE] China has lifted refined fuel export restrictions for the rest of July and allowed a private refiner to resume shipments after a four-month halt, trade sources said on Wednesday (Jul 8).

This comes as the world’s biggest refiner returns towards normalcy after disruptions from the Iran war.

The resumption of refined fuel exports from one of Asia’s largest exporters comes after the interim peace deal between the US and Iran.

The move is expected to ease prices for transportation fuels in a region where consumers have been grappling with inflation since Beijing curbed shipments to secure domestic supplies in March.

It may also encourage state refiners to increase output to capitalise on strong export margins, supporting a rebound in oil shipments to China, the world’s top importer.

Zhejiang Petrochemical, majority owned by Rongsheng Petrochemical, has been permitted to export fuel in July, four sources briefed on the matter said. This is after the firm halted exports for more than three months.

China’s Ministry of Commerce and the National Development Reform Commission did not immediately respond to faxed requests for comment.

Rongsheng did not immediately respond to a request for comment. The sources declined to be named because they were not authorised to speak to the media.

Over the past few months, only state-owned companies were permitted to export gasoline, diesel and jet fuel and they were required to apply for volumes on a monthly basis.

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Refiners are planning to export roughly three million metric tonnes of the three fuels this month, including bonded volumes to Hong Kong and Macau, said two other sources, similar to last year’s average export volume.

However, the scheduling of these cargoes is still underway and should be settled by the end of this week, they said. Exports were initially set to hit nearly two million tonnes for July, Reuters reported earlier.

It remains unclear if the lifting of export curbs will continue in August, two of the sources added.

The interim US-Iran deal had already prompted a surge in Middle Eastern oil exports depressing global prices and easing supply concerns, though this week’s attacks have again unnerved markets pushing prices back up.

Lucrative export margins

For July, China’s gasoline exports could rise to more than 400,000 metric tonnes, one of the two sources said, up from slightly below 40,000 tonnes in a preliminary plan.

Meanwhile, diesel exports could reach 600,000 to 700,000 tonnes, up from around 200,000 tonnes previously, while jet fuel outflows may rise to roughly 1.9 million tonnes from 1.5 million tonnes earlier, the second source said.

Export margins for China’s refiners remained lucrative, hovering at 1,000 yuan per tonne (US$147.10) or more this week, according to two other trade sources.

Refiners will probably aim to utilise their outstanding quotas once the export restrictions are eased, FGE NexantECA analysts said in a report.

Meanwhile, gasoline exports are set to see more upside than diesel later this year as domestic demand faces more pressure from the accelerating adoption of electric vehicles. REUTERS