China sets oil products export quotas at about 15 million tonnes

CHINA has set the size of its latest batch of oil products export quotas for 2022 at about 15 million tonnes, trade sources with knowledge of the matter said on Friday (Sep 30), a shift in fuel export policy as Beijing seeks ways to boost trade.

The quotas, widely expected by the market for the last two weeks, include 13.25 million tonnes of refined products - normally petrol, diesel and aviation fuel - and 1.75 million tonnes of low-sulphur marine fuel, two of the sources said.

The new issue of 13.25 million tonnes, the year’s single largest allotment, takes total allotments of diesel, gasoline and jet fuel combined for 2022 to 37.25 million tonnes, on par with 2021.

Industry and government sources have said the rushed decision to raise refined fuel exports, a change in policy after steep curbs earlier in the year, was part of Beijing’s effort to lift sagging merchandise exports.

Asian oil products market fell after the news, with refining profit for 10-ppm gas oil hitting a two-week low of US$32.00 a barrel over benchmark Dubai crude, versus US$36.93 on Thursday.

Similarly, refining margins for jet fuel also hit a two-week low of US$24.85 a barrel over Dubai, down from US$29.58 in the previous session, while those of petrol slipped to 81 cents a barrel over Brent Crude, from US$2.13 a day earlier.

Sources said top state refiner Sinopec and CNPC together accounted for over 80 per cent of the new permits, with the rest shared by state-run firms such as Sinochem Group and China National Offshore Oil Company, as well as privately-controlled Zhejiang Petrochemical Corp.

The commerce ministry, which is in charge of issuing quotas, did not immediately respond to a request for comment.

Trading sources and analysts said the sheer size of the new quotas, amounting to 55 per cent of the volume of the previous four issues combined, could mean some of them could spill over into 2023.

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“Due to the large size and considering refiners’ operational situations ... companies may be allowed to use some of the quotas during the first quarter of next year,” said China-based commodities consultancy JLC.

China’s exports of refined products are set for big increases during the final quarter of this year, it added.

The new quotas, under the fifth batch of issue, included 1.75 million tonnes of very low sulphur marine fuel (VLSFO). That takes total marine fuel quotas released this year to 16.75 million tonnes, nearly 40 per cent more than 2021. REUTERS