In a shift in fuel export policy as Beijing looks for methods to increase commerce, China has set the size of its most recent batch of oil product export quotas for 2022 at roughly 15 million tonnes, trade sources with knowledge of the situation said on Friday.
Largest allocation
According to two of the sources, the market has been anticipating the quotas for the last two weeks. They comprise 13.25 million tonnes of refined goods, which are typically gasoline, diesel, and aviation fuel, and 1.75 million tonnes of low-sulfur marine fuel.
The additional allocation of 13.25 million tonnes, the largest allocation of the year, brings the overall allocations of jet fuel, diesel, and gasoline for 2022 to 37.25 million tonnes, which is on par with 2021.
According to industry and government insiders, Beijing’s hasty move to increase refined petroleum exports—a policy reversal following severe limitations earlier in the year—was an effort to boost flagging product exports.
Oil price plunged
Following the news, the price of oil products in Asia plunged. Refining profit for 10-ppm gasoil GO10SGCKMc1 touched a two-week low of $32.00 per barrel over benchmark Dubai crude, down from $36.93 on Thursday.
Similar to how gasoline GL92-SIN-CRK refining margins fell to 81 cents per barrel over Brent oil from $2.13 a day earlier, jet fuel margins likewise touched a two-week low of $24.85 per barrel over Dubai.
According to sources, the largest state refiner Sinopec and CNPC combined accounted for over 80% of the new licences, with the remaining permits being split between privately owned Zhejiang Petrochemical Corp. and state-run businesses like Sinochem Group and China National Offshore Oil Company.
The ministry of trade, which is in charge of releasing quotas,
New limits
According to trading sources and analysts, some of the new limits may extend beyond 2023 due to their size, which is equal to 55% of the volume of the preceding four issues combined.
According to China-based commodities consultant JLC, “because of the big size and taking into account refiners’ operational difficulties, companies may be allowed to utilise some of the quotas during the first quarter of next year.”
The final quarter of this year is expected to see significant rises in China’s exports of refined goods, it stated.
The new quotas under the fifth batch of issues contained 1.75 million tonnes of marine gasoline with very low sulphur (VLSFO). With that, this year’s total maritime fuel quotas have been revealed, which is 16.75 million tonnes greater than in 2021.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: GCaptain
