China Awards 18.36 mil mt Oil Product Export Quota For 2019, Up 13% on Year

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Beijing has awarded 18.36 million mt of export quotas for gasoline, gasoil and jet fuel to state-owned refiners in the first round of allocations for 2019, which is 13% higher than the same round in 2018, according to an official document dated December 20 seen by S&P Global Platts.

The allocations for gasoline exports are sharply lower for 2019, which will help tighten regional gasoline markets, as refiners anticipate slower consumption due to weaker consumer demand and sluggish economic activity. This will be offset by an increase in distillate exports that are likely to ease Asian gasoil markets.

The quotas were awarded to state-owned CNPC, Sinopec, CNOOC and Sinochem and fall under the general trade category. China awards petroleum export quotas under the general and processing categories.

Under the general trade route, state refiners are free to export from the domestic market, irrespective of whether the feedstock is domestic or imported crude. Unused quotas can be rolled over to the following quarter, but not to the following year.

Under the processing trade route, refiners have less flexibility–the feedstock must be imported crude and the products can only be sold to the party that supplied the crude feedstock, although the products can be resold again.

The gasoline export quota for 2019 fell 21% year on year to 5.19 million mt. Sinopec saw the largest decline in gasoline quotas, down 48% at 650,000 mt, and the largest increase in gasoil quotas, up 36% year on year at 4.75 million mt.

Export quotas for middle distillates — gasoil and jet fuel — rose 24.5% and 65.5% year on year to 8.7 million mt and 4.47 million mt, respectively, according to the document.

“We expect China’s gasoline exports to slow in 2019,” Wang Zhuwei, senior analyst with S&P Global Platts Analytics said. “A lull in gasoline demand in domestic and overseas markets will make Chinese refiners switch to more profitable middle distillate production at the cost of lowering the gasoline yield.”

For jet fuel, despite a surge in CNPC’s quota by 182% year on year to 960,000 mt, Sinopec remained the biggest quota holder for the grade at 2.9 million mt of jet fuel exports, up 45% year on year. The Ministry of Commerce also awarded a 20,000 mt isoprene export quota under the general trade category.

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Market participants are now awaiting export quotas under the processing category, which are expected to be less than one-third of the general category, and mostly comprise jet fuel barrels sent to bonded storage for fueling international flights.

Meanwhile, Chinese oil companies have started implementing export plans for January.

China’s gasoline exports in January are estimated to be slightly above 1 million mt, retreating from a high of over 1.5 million mt in December, when oil companies rushed to use up their quotas, a Beijing-based trader said.

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PetroChina has also finalized plans to export 710,000 mt of gasoline, 650,000 mt of gasoil and 400,000 mt of jet fuel in January, marginally lower than December’s peak levels, a company executive said.

Others will boost exports. Executives at Sinopec’s Shanghai Petrochemical and Sinopec’s Gaoqiao Petrochemical said the two refineries will raise their product exports in January from December levels.

China’s gasoline, gasoil and jet fuel exports in the first 11 months of 2018 totaled 11.6 million mt, 16.96 million mt and 13.13 million mt respectively, up 24.4%, 11.2% and 14.2% year on year, data from the General Administration of Customs showed.

China’s first round export quotas for 2019 under the general trade route:
Unit: ‘000 mt
Gasoline Gasoil Jet fuel Total
CNPC 2,990 2,140 960 6,090
Sinopec 650 4,750 2,900 8,300
CNOOC 630 740 470 1,840
Sinochem 920 1,070 140 2,130
Total 5,190 8,700 4,470 18,360
2019 Round 1 2018 Round 1 Change
Gasoline 5,190 6,550 -20.8%
Gasoil 8,700 6,990 24.5%
Jet fuel 4,470 2,700 65.6%
Total 18,360 16,240 13.1%
Source: Official document

 

Authored By: Oceana Zhou,  Editor: Irene Tang

SOURCE: SP GLOBAL

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