On 30 September 2022, China added 15 million tonnes to its 2022 export quota for oil products. The quota includes 13.25 million tonnes for gasoline, diesel and jet fuel as well as 1.75 million for low-sulphur marine fuel.
If headed for the EU, it could be a welcome addition to the block seeking to replace on average 2 million tonnes of diesel imports from Russia when sanctions take effect from February 2023 and demand for heating increases in the winter months. It could also add some attractive tonne miles for product tankers, reads a BIMCO release.
China sets oil products export quotas at about 15 million tonnes
The 15 million tonnes addition brings the total 2022 quota for gasoline, diesel, and jet fuel to 37.25 million tonnes, on par with 2021. The move reverses earlier steep curbs in export quotas and boosts the full year quota for gasoline, diesel, and jet fuel by 55%.
During the first nine months of 2022, exports of gasoline, diesel, and jet fuel have been 45% lower than in 2021. So far, 18.4 million tonnes have been exported, leaving 18.85 million of the full year export quota unused. To fill the full year quota, average monthly exports during the fourth quarter would have to triple compared to year-to-date. This appears unlikely and many analysts are expecting that refineries will be allowed to make use of the 2022 quota in 2023.
Chinese exports of diesel have been particularly low in 2022. During the first nine months of the year diesel exports have fallen 72% y/y. A return to 2019 levels could increase average monthly diesel export volumes by 1.3 million tonnes to 1.8 million tonnes.
Increased diesel exports are of particular interest as EU’s sanctions of Russian refined oil products will be implemented on 5 February 2023, and since 90% of the import volumes is diesel. By now, the EU’s imports of Russian crude oil are almost 25% lower than last year, however, diesel imports from Russia have not yet been reduced.
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Source: BIMCO
