China’s gasoline exports experienced a significant decline of 35.7% in July compared to the previous year, as refiners reduced crude runs and scaled back shipments amid weakening profit margins. According to customs data released on Sunday, gasoline exports stood at 790,000 metric tons last month, down from 1.22 million tons in July of the previous year and 930,000 tons in June.

“Motor fuel exports remain capped because of weak margins and production, due to refinery run cuts,” explained Emma Li, senior China oil analyst for Vortexa. The export margins for gasoline were largely negative between late June and early July, resulting in a loss of $3 to $4 per barrel for export sales, according to a trader who preferred to remain anonymous.

In contrast to the decline in gasoline and diesel exports, China’s jet fuel shipments saw a notable increase, rising 20.2% year-on-year to 1.76 million tons in July, up from 1.47 million tons in the same month last year. The statistics bureau reported a 23.9% rise in jet fuel production during the January to July period, reflecting the prioritization of jet fuel by key oil majors. This shift is driven by strong demand in the air travel sector, both domestically and internationally.

International flights in China surged 60% year-on-year in July, reaching an average of 2,111 daily flights, which is approximately 75% of the daily average for July 2019, before the COVID-19 pandemic. The fuel provided to these international flights is categorized as an export in customs statistics.

Diesel exports, on the other hand, plummeted by 41.2% year-on-year to 540,000 tons in July, a significant drop from the 910,000 tons exported in the same month last year. Although profit margins for diesel have improved over the last two months, overall production has decreased as refiners focus on maximizing jet fuel output. Diesel output fell by 4.7% to 119.39 million tons during the January-July period.

China’s domestic diesel consumption has also weakened due to a slowdown in the property and manufacturing sectors, as well as a shift towards liquefied natural gas (LNG) in the trucking industry. This trend is expected to continue into the second half of the year.

In July, China’s total imports of LNG rose slightly by 1.1% year-on-year to 5.90 million tons, while overall exports of refined oil products, including marine fuel, declined by 6% to 4.98 million tons compared to 5.31 million tons in the same period last year.

“China will likely issue more product export quotas to boost refinery runs,” added Vortexa’s Li, as Beijing continues to manage the balance between domestic supply and demand through its quota system.

(Adapted from Reuters.com)

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