March 22, 2023 [Energy Intelligence] – China’s combined exports of gasoline, diesel and jet fuel exceeded expectations, totaling 10 million tons in January-February.
Industry had suggested that they would likely hit 7 million tons at most.
This year’s January-February fuel exports were the highest for the two-month period since China started exporting significant volumes of refined products in 2014, customs data show.
But they were lower than in December when they totaled 6 million tons, their highest monthly volume since April 2020.
The rise in December exports followed China’s sudden relaxation of Covid-19 measures, which led to a wave of new cases in large cities and prompted people to stay home to avoid infection.
China typically combines official statistics for the first two months of the year to smooth out the effect of the Chinese New Year holiday, which falls in January in some years and in February in others.
Gasoline and Jet Fuel
High exports of gasoline in particular were a surprise as refiners had been expected to hold back more of the product to meet domestic demand as driving picked up after the lifting of Covid-19 restrictions.
Instead, gasoline exports averaged 325,000 barrels per day over the first two months of this year as refiners ramped up output.
Chinese refineries’ January-February crude throughput rose by 260,000 b/d from December to 14.42 million b/d, according to official data.
Jet fuel exports surpassed expectations by a wide margin, but this may be because the official export data includes fuel released from bonded storage for international flights, whereas industry estimates only capture jet fuel that is exported from the country aboard ships.
China’s January-February jet fuel exports rose to 340,000 b/d, more than doubling from a year ago, as international flights gradually ramped up after Covid-19 quarantine and testing requirements were lifted or relaxed.
Gasoil and Diesel
January-February gasoil exports jumped to 574,000 b/d from a very low level a year ago, but volumes were in line with expectations of limited domestic demand during the Chinese New Year holiday, during which factories close for about two weeks as workers return to rural China.
Domestic diesel demand is expected to rise now, as factories ramp up operations, deliveries of goods by truck resume and construction activity rises.
That should limit exports as domestic margins rise in line with growing demand as a result of increased economic activity.
China exported 455,000 tons of diesel (about 56,000 b/d) to Europe in January-February, or about 10% of its overall diesel exports, as an EU ban on imports of refined products from Russia took effect on Feb. 5.
Expectations that China would become a major diesel exporter to Europe to replace lost Russian volumes, have not materialized so far.
Instead, most of China’s rising diesel imports went to its traditional buyers: Bangladesh, Southeast Asia (Philippines, Malaysia, Singapore) and Australia.
Nevertheless, China’s diesel exports to Europe did show a sharp increase compared with the same period of last year.
In January-February 2022 — after Beijing slashed export quotas for refined products, but before the Russian invasion of Ukraine — Europe received just under 2,000 b/d of diesel from China out of total exports of 54,000 b/d.
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