- Shipments fell 26% to five-month low; imports more than triple
- Refiners lack incentives to export as margins improve: ICIS
China’s diesel exports fell from a three-month high while imports surged as the government’s decision to halt fuel price cuts amid crude’s crash made domestic sales more attractive.
The world’s largest energy consumer shipped overseas 730,000 metric tons of diesel in January, the lowest in five months, data from the General Administration of Customs showed Sunday. While that’s more than tenfold the same period a year ago, exports slid 26 percent from about 980,000 tons during the previous month. Imports more than tripled from December to 150,000 tons, the highest in 10 months.
China has been flooding regional markets with diesel as stockpiles of the fuel swell amid slowing industrial activity and shifting demand growth toward gasoline. The government’s decision not to cut retail prices when oil falls below $40 a barrel has made domestic sales more profitable compared with exports, according to ICIS China, a Shanghai-based commodity consultant. Brent crude, the global benchmark, closed down 3.7 percent at $33.01 a barrel on Friday.
“Refiners definitely prefer to sell in local markets where margins are better, and a few traders have actually started to import,” Lin Jiaxin, an analyst with ICIS China, said before the data were released. “Diesel exports will remain subdued until March, when some teapot refineries may export some cargoes.”
China more than doubled its first batch of fuel-export quotas for this year to 20.93 million tons, ICIS China said on Jan. 6. Five companies, including four independent refiners, known as teapots, obtained a combined 430,000 tons of fuel-export licenses for the first time, it said.
The nation’s net oil product exports -- a measure that strips out imports -- fell 76 percent in January from the previous month to 350,000 metric tons, the lowest since June, according to calculations based on preliminary customs data released earlier this month. The decline in net exports was also partly due to cold weather that boosted domestic demand, analysts at Citigroup Inc. including Ivan Szpakowski said in a report Feb. 15
Also in January, gasoline exports rose 92 percent from last year to 590,000 tons. Although kerosene shipments were 1.4 percent higher from the same period a year ago, they fell from December to 940,000 tons, the lowest since July.
— With assistance by Jing Yang