China has eased restrictions on refined fuel exports for the remainder of July and allowed a private refiner to resume overseas shipments after a four-month suspension, trade sources said on Wednesday, signaling a return to normal operations following disruptions caused by the Iran conflict.
The move comes after the interim peace agreement between the United States and Iran and is expected to ease transportation fuel prices across Asia, where consumers have faced higher costs since Beijing restricted exports in March to prioritize domestic fuel supplies.
It may also encourage state refiners to increase output to capitalise on strong export margins, supporting a rebound in oil shipments to China, the world’s top importer.
Private Refiner Resumes Overseas Shipments
Zhejiang Petrochemical Co, majority owned by Rongsheng Petrochemical, has been permitted to export fuel in July, four sources briefed on the matter said, after it halted exports for more than three months.
China’s Ministry of Commerce and the National Development Reform Commission did not immediately respond to faxed requests for comment. Rongsheng did not immediately respond to a request for comment. The sources declined to be named because they were not authorised to speak to the media.
Over the past few months, only state-owned companies were permitted to export gasoline, diesel and jet fuel and they were required to apply for volumes on a monthly basis.
Refiners are planning to export roughly 3 million metric tons of the three fuels this month, including bonded volumes to Hong Kong and Macau, said two other sources, similar to last year’s average export volume. However, the scheduling of these cargoes was still underway and should be settled by the end of this week, they said.
Exports were initially set to hit nearly 2 million tons for July, Reuters reported earlier.
It remains unclear if the lifting of export curbs will continue in August, two of the sources added.
The interim U.S.-Iran deal had already prompted a surge in Middle Eastern oil exports depressing global prices and easing supply concerns, though this week’s attacks have again unnerved markets pushing prices back up.
Lucrative Export Margins
For July, China’s gasoline exports could rise to more than 400,000 metric tons, one of the two sources said, up from slightly below 40,000 tons in a preliminary plan.
Meanwhile, diesel exports could reach 600,000 to 700,000 tons, up from around 200,000 tons previously, while jet fuel outflows may rise to roughly 1.9 million tons from 1.5 million tons earlier, the second source said.
Export margins for China’s refiners remained lucrative, hovering at 1,000 yuan per ton ($147.10) or more this week, according to two other trade sources.
Refiners will probably aim to utilise their outstanding quotas once the export restrictions are eased, FGE NexantECA analysts said in a report, with gasoline exports to see more upside than diesel later this year as domestic demand faces more pressure from the accelerating adoption of electric vehicles.
(With inputs from Reuters)
