- China’s October-loading gasoil volumes lower than anticipated
- But outflows across Northeast Asia set to pick up in November
China’s lower-than-expected gasoil exports since the Golden Week holiday over Oct.1-7 are providing near-term support to the Asian gasoil market, though the support may prove short-lived as heavier outflows in November are expected to increase availability by year end, market sources said Oct. 17-18, reports Platts.
Gasoil export volumes from China
Industry participants have been closely watching gasoil export volumes from China since refiners returned after the week-long holiday to news of the release of the latest batch of oil product export quotas, which include 13.25 million mt for gasoil, gasoline and jet fuel, as well as 1.75 million mt for fuel oil.
“They have been issued 15 million mt in oil product export quota … don’t think logistically they can export the full volume in the rest of the year,” an industry source said.
However, China’s gasoil exports have been unexpectedly slow since the quota release, with several shipping fixtures done for October-loading cargoes reportedly having failed, which has contributed to a slight recovery in the Asian gasoil complex.
“Close to half a dozen ships were taken for loading gasoil during the Oct. 21-31 period at Chinese ports recently, but most of them have now been released, with no replacements in the offing,” a broker in Tokyo said.
Slow pace of exports
The Platts FOB Singapore November-December time spread for 10 ppm sulfur gasoil derivatives was assessed at $5.65/b at the 0830 GMT Asian close Oct. 17, widening 0.89% day on day and surging 68.66% since Oct. 11, when the latest uptrend began, S&P Global Commodity Insights data showed.
The slow pace of exports comes as China’s refiners hold back in anticipation of better earnings, market participants said. Less than 100,000 mt has been covered with spot tonnage for shipment in the last decade of October so far, although this volume does not include exports that companies do in their own ships that are not picked up from the spot market.
Unlike the past when China’s refiners would have to exhaust their quotas by year end, the new option to roll over quotas to the next year allows them to “test the market to avoid higher freight with a lower cargo price,” the broker said. “They have become smarter and there is no rush to export; volumes are being offered only step by step.”
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Source: Platts
