China’s exports of refined fuel products surged year-on-year in May, data showed on Sunday, as weak domestic demand saw refiners shift inventories overseas while crude imports and throughput remained high.
Diesel exports were up almost four times at 600,000 metric tons, versus a low base of 120,000 metric tons in the same period last year, while gasoline exports rose 67% to 1.36 million metric tons. Continued weakness in China’s property market, evident in recent data showing sliding property investment, has weighed on domestic diesel demand, alongside a sluggish manufacturing sector. Domestic demand for gasoline had been expected to soften in May, as road travel normalized following the end of the national holiday at the start of the month.
“With the holiday having ended and subdued retail sales thereafter, gasoline and diesel demand should have retreated and exports should rebound,” analysts from Citi wrote in a note in late May. International flights in and out of China had reached their highest levels thus far in 2023, at 62% of pre-pandemic levels, said analysts at JPMorgan in a client note.
Geopolitical tensions and the closure of Russian airspace to many airlines continues to weigh on the market, the JPMorgan note added. Total refined fuel exports, which also includes marine bunker fuel, surged 49.8% last year to reach 4.88 million metric tons in May, data previously showed. In May, Chinese authorities issued 9 million metric tons of fuel export quotas under a second allotment for 2023, just half of the 18.99 million metric tons released in January but double the allocation of 4.5 million metric tons issued around a year earlier.
Also, China’s total monthly refinery throughput reached the second highest level on record in May, as refinery capacity came back online from maintenance and independent refiners in Shandong province snapped up discounted, sanctioned cargoes from Iran, Russia and Venezuela.
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