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China's Q2 gasoline exports may dip on turnarounds, domestic demand: survey

Singapore — China's gasoline exports will likely fall in the second quarter as a slew of state-owned refineries are scheduled to undergo heavy maintenance in the coming months, while the recovery in domestic auto fuel demand has encouraged local producers to keep more barrels at home.

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According to a survey of state-run refiners, including Sinopec, PetroChina, CNOOC and Sinochem, conducted by S&P Global Platts, the major auto fuel producers together plan to export around 600,000 mt of gasoline in April, around 45% lower than around 1.1 million mt expected to be shipped out in March.

"China will export less oil products in the coming months due to the heavy maintenance coming up. The recent pickup in domestic demand for oil products will also keep more barrels home," said Wang Zhuwei, senior analyst with S&P Global Platts Analytics.

China will see a total refining capacity of around 900,000 b/d go offline in April from around eight major refineries, compared to a combined offline capacity of around 686,000 b/d in March from the refineries, according to data from Platts Analytics.

Refineries that will be undergoing maintenance include CNOOC's Huizhou phase 1 refinery, four refineries under Sinopec, three refineries operated by PetroChina, and three from the country's independent refineries.

"The heavy maintenance in April will prevent China's refineries from exporting more gasoline next month, and exports will likely remain limited in May and June when offline capacity remains big," said an industry analyst based in Beijing.

CUTS IN EXPORTS LIFT ASIAN CRACKS

Asian gasoline cracks improve as China plans to cut exportsPetroChina will lead China's cuts in gasoline exports next month, a company source told Platts.

"The [company's] total exports are likely to drop to around 210,000 mt from around 700,000 mt this month," the source said.

PetroChina typically accounts for about 50%-60% of China's total gasoline exports.

The company's 10 million mt/year Dalian Wepec refinery will be shut for maintenance over April 1-May 20. The refinery usually exports around 350,000 mt/month of oil products, including 150,000-180,000 mt/month of gasoline.

The refinery will halt exports of gasoline, gasoil and jet fuel in April because of the maintenance, according to a refinery source.

Elsewhere, PetroChina's Guangxi Petrochemical -- another major oil products exporter -- will slash its gasoline exports by half in April to just two cargoes totaling around 70,000 mt.

"The gasoline demand will improve gradually in April, so we'll save some barrels for the domestic market," said a source with Guangxi Petrochemical.

Sinochem's Quanzhou refinery, the biggest gasoline exporting refinery by volume, will also lower its April shipments in order to meet domestic demand, a company source said.

The refiner normally exports 4-5 MR-sized cargoes of gasoline every month.

The Qingming Festival in early April and the Labor Day holiday in early May will likely boost domestic demand for gasoline as passenger car usage would increase sharply during the holiday periods amid warmer weather, according to market sources.

The outlook for lower Chinese supply gave the Asian gasoline market a boost, with benchmark Singapore 92 RON gasoline crack against front-month ICE Brent crude futures rallying to a multi-month high last week.

The crack stood at $7.68/b at the Asian close Friday, the highest level since $8.09/b on October 1, 2018.

-- Analysis by Daisy Xu, newsdesk@spglobal.com

-- Gawoon Philip Vahn, newsdesk@spglobal.com

-- Oceana Zhou, newsdesk@spglobal.com

-- Edited by Shashwat Pradhan, newsdesk@spglobal.com