China's gasoil exports to resume in Dec but stay at low levels: sources

China's oil companies are expected to resume gasoil exports in December as domestic supply shortage eases, but the volume will likely stay subdued in comparison to gasoline and jet fuel outflows, refinery and trade sources told S&P Global Platts on Nov. 30.

China's gasoil exports averaged 1.64 million mt over January-October, data from General Administration of Customs showed.

The country's oil companies are likely to export around 210,000 mt of gasoil in December, according to sources with knowledge about the matter. This comes as a notable change from the situation in November, when they were heard to not have exported any gasoil.

PetroChina's Guangxi Petrochemical in southeast Guangxi province, which skipped gasoil exports in November, plans to export 40,000 mt of gasoil in December, according to a close source with knowledge of the matter.

"It has become a bit difficult to sell out the barrels [locally] toward December," a source with the refinery said.

A source at Sinopec's Zhenhai Refining and Chemical echoed that sentiment. The refinery plans to export some barrels of gasoil as demand-side fundamentals change, but the volume has not been fixed yet, the source said.

China was short of gasoil supply from September to mid-October, pushing refineries to boost gasoil production and halt exports to meet domestic demand.

As the peak season for gasoil consumption has ended, "Gasoil supply in some regions of East and South China has become a bit of more than sufficient, " a trading source said.

A source with PetroChina's refinery in northeastern China said the company's sales arm had reduced the intake of gasoil from its refining facilities, indicating softening demand.

"Some refiners may adjust their plan to lift gasoil exports if domestic demand softens in December, but the rebound is unlikely to be strong given limited quota availability," the trading source said.

China exported 36.1 million mt of gasoline, gasoil and jet fuel in January-October, customs data showed. In contrast, the government awarded 37.61 million mt of gasoline, gasoil, and jet fuel export quotas for 2021.

Gasoline, jet fuel exports

These quota holders are estimated to export around 1.14 million mt of gasoline in December, compared with estimated exports of 770,000 mt for November, and 694,000 mt in October.

Zhejiang Petroleum & Chemical is likely to continue leading gasoline exports, shipping about 400,000 mt of the fuel overseas, up from 300,000 mt estimated in November, according to sources with knowledge of the matter

The 800,000 b/d private integrated refining complex started all of its four 200,000 b/d crude distillation units in order to fully utilize its newly allocated 12 million mt crude import quota on Oct. 25, which will boost its oil product output along the way.

Sinochem is also likely to triple its gasoline exports to 180,000 mt in December from 60,000 mt in November, and export 40,000 mt of jet fuel.

The company increased its oil product export quotas under general trade by 259,000 mt in mid-November, though it will shut its Quanzhou refinery in early December for a 40-50 day maintenance.

Sources with knowledge about the matter said Sinochem will fully use the quotas by sourcing from ChemChina refineries that it merged this year.

Estimated exports of jet fuel by these oil companies is also likely to increase, to around 720,000 mt in December, up from 550,000 mt in November.

Sinopec will likely contribute 440,000 mt to the outflows in December, compared with 310,000 mt a month earlier, sources with knowledge of the matter said.