China to ramp up petrols exports amid virus, adding to regional glut
[SINGAPORE] China is to ramp up petrol exports in March and April as its refiners rid themselves of excess stock in the world's largest energy consumer after the coronavirus outbreak hit domestic fuel sales.
The scale-up in Chinese exports could exert further downward pressure on petrol margins in the region where supply is also on the rise. The virus could reduce demand by as much as 730,000 barrels per day (bpd) in the first quarter, according to energy consulting firm FGE, more than double the monthly imports by Asia's top petrol importer, Indonesia.
Estimates from industry sources and FGE showed that Chinese petrol exports are expected to rise to about 465,000 to 530,000 barrels per day (bpd) in March, potentially surpassing the all-time high of 520,000 bpd seen in November.
China's petrol exports are already increasing as trucks in the country resume work, easing earlier bottlenecks, FGE analysts Sri Paravaikkarasu and Sandy Kwa said.
The projected exports would be a big leap from February's shipments estimated at a six-month low of about 1.2 million tonnes, according to Refinitiv Oil Research.
Asia is expected to see a petrol supply surplus of 120,000 bpd in the first quarter from the same period a year earlier, according to FGE.
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"Even before the coronavirus outbreak, we were expecting China's petrol surplus to grow strongly this year due to new refining capacity with a pronounced light-distillates supply focus," said JBC Energy's lead Asia analyst, Kostantsa Rangelova.
But the coming spring refinery maintenance, a slow recovery in Chinese petrol demand and expectations of discretionary driving during the peak summer season would support the petrol market from second quarter, said Mr Paravaikkarasu and Ms Kwa.
"As such, cracks (to Dubai crude) should then edge up to around US$7 to US$8 a barrel by end-Q2," they said, versus current levels of US$5 to US$6 a barrel.
REUTERS
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