CHINA DATA: Nov oil product exports at 2.35 mil mt, higher than expected

China's gasoline, gasoil and jet fuel exports amounted to 2.35 million mt, data from the General Administration of Customs showed Dec. 18, which was notably higher than expected despite the 36% year-on-year slump and 2% month-on-month decline.

The volume in November brought China's export of key oil products to 38.45 million mt, which exceeded the 37.61 million mt of quotas allocated by Beijing for the three products in 2021.

In order to ensure sufficient domestic supply, China restricts the export of domestically produced gasoline, gasoil and jet fuel via quotas.

In the last few years, China's allocation of export quotas had been more or less sufficient, leading China's annual export of these three products to be below quota levels.

This also led market participants and observers to expect the country's 2021 outflows to be capped at the quota volume of 37.61 million mt.

But it is possible to see more actual exports than quotas when the allocation volume is tight, analysts said.

"GAC's volume include re-exported barrels which are imported and stored in China's bonded storage. Export quotas are not required when sending these barrels overseas," a Beijing-based analyst said.

"Due to the contango market structure in 2020, we see significant increases in gasoline and gasoil imports in China's bonded storage, providing the barrels for re-export this year, when Asian product market is short," the analyst added.

China imported 1.67 million mt of gasoline and gasoil, which were stored in bonded storage in 2020, compared with 1.49 million mt in 2019 and 974,000 mt in 2018, the GAC data showed. The overall volume stood at 772,000 mt over January-October this year.

Beijing is set to slash the country's oil product exports in an effort to reduce carbon emissions. The quota allocation for 2021 slumped 36.3% from 59.03 million mt in 2020, while oil products exports fell 9.2% year on year in January-November.

Gasoil exports rise

Meanwhile, market participants and observers expected China's gasoil exports to fall to a historical low as oil giants Sinopec and PetroChina had announced they will cut outflows from October levels in order to increase domestic supply.

However, the GAC data showed that China's gasoil exports rose 7.1% month on month to about 600,000 mt in November.

"There are some last minute adjustments to the initial export plan by those oil majors, as supply in the domestic market has become a bit oversupply in late November," an East China trade source said.

"Not only in November, oil firms may export more gasoil or gasoline this month to offset inventory pressure in some regions, since all state refiners have lifted output, while demand softens in winter and COVID reemerges," he add.

A source with PetroChina's Guangxi Petrochemical said the plant will export two gasoline cargoes in December, given the weak regional demand, compared with nothing last month.

Sinopec's Qingdao Refining and Petrochemical also lifted gasoil, gasoline exports to about 100,000 mt from zero in November, according to a company source.

China exported 810,000 mt of gasoline in November, down 19.8% from October, the GAC data showed.

Jet fuel hit 19-month high

Jet fuel exports increased 13.3% month on month to a 19-month high of 940,000 mt in November despite output dropping to a multi-year low last month. Jet fuel exports were last higher in April 2020 at 2.03 million mt.

China produced 2.26 million mt in November, which was the lowest output since December 2013.

"China increases jet fuel exports in November as Asian market was so strong ahead of the emergence of omicron, as domestic demand remains sluggish," a Singapore-based trader said.

China's key oil product exports ('000 mt)

Source: General Administration of Customs