China’s Diesel Exports Could Slip To 8-Month Low On Local Demand

China’s diesel exports could fall to the lowest level since July as refiners focus on meeting local demand and increasing domestic stockpiles ahead of planned overhauls at refineries, a Reuters survey showed.

• Diesel exports are estimated at 400,000 to 770,000 tonnes compared with estimates of about 2mn tonnes in February, a survey of consultancies JLC, Longzhong and Refinitiv, and two China-based trade sources showed.
• This could bring diesel, gasoline and jet fuel exports this month to 1.5-1.94mn tonnes, at least 50% lower than the February estimate of 3.9-4.15mn tonnes, the survey showed.
• Lower Chinese exports also point to a recovery in domestic fuel demand and prices after the China lifted COVID-19 measures.
• The decline in exports could tighten Asia’s supplies and provide support for refiners’ diesel margins, especially as the region enters peak demand season from the agriculture and construction sectors between April and July.
• The need to secure sufficient domestic supply during the peak maintenance season for Chinese refineries is a major reason for lower diesel exports, Vortexa analyst Emma Li said.
• Between 600-800kbpd of crude processing capacity will be shut between April and June, curbing refined products output, Reuters calculations and consultancies’ data showed.
• Another factor is that Chinese exporters’ profits have fallen, sapped by a more than 30% drop in Asian diesel cracks since mid-January. Domestic netbacks are more favourable as local retail prices have fallen less than international prices, a Singapore-based trader said.
• Chinese refiners are also less inclined to use up their export quotas quickly as Beijing is expected to curb exports in 2023 versus 2022, Vortexa’s Li added.
• March exports for jet fuel are also expected to decline by at least 50% from February estimates to 690,000-810,000 tonnes, the survey showed.
• China’s gasoline exports were expected to be steady at between 300,000-362,000 tonnes in March as domestic demand recovers, the survey showed. Last month’s survey showed gasoline exports were likely to fall to eight-year lows in February.