SINGAPORE: China has raised export quotas for refined oil products in the year’s first batch by nearly half versus a year earlier, China-based consultancies said on Tuesday, another effort to spur refinery production and capture healthy export margins amid slow domestic demand.
The government has released 18.99 million tonnes of quotas to cover mostly gasoline, diesel and jet fuel exports, up 46% versus 13 million tonnes allotted a year earlier, reported by consultancies JLC and Longzhong, both of which have in recent years been closely and correctly tracking Beijing’s fuel quota policy.
Of the total, state-run China Petrochemical Corp (Sinopec), China National Petroleum Corp, China National Offshore Oil Company, Sinochem Group, as well as privately controlled Zhejiang Petrochemical Corp, were granted a total of 18.73 million tonnes of permits, the agencies said.
A refinery subsidiary of state defence conglomerate Norinco and China National Aviation Fuel Company was allotted the remainder. The Ministry of Commerce did not immediately respond to a request for comment.
The higher volumes of quotas followed a sizable issuance of 13.25 million tonnes in September as the government rushed to shore up its faltering economy by encouraging refiners to step up operations and to benefit from robust export profits.
The bigger quotas also reflected weak domestic fuel consumption as a surge in COVID infections following the dropping of virus control measures crimped travel and economic activity, a trader said.
“It will take a while before consumption comes back given the current COVID situation,” the trader said. Separately, China also released 8 million tonnes of low-sulphur fuel oil export quotas in the first batch for 2023, which compared with 6.5 million tonnes a year earlier, the consultancies reported.
Under a longer-term goal to curb carbon emissions, authorities intend to rein in excessive refinery processing and thus fuel exports, but a drastic economic slowdown over 2022 forced the government to change its fuel trade policy towards lifting sagging merchandise exports.
Exports of gasoline and diesel, in particular, have rallied in recent months as refiners dashed to use up export quotas and thin domestic inventories while export margins remained attractive.
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