China's oil products exports are set to rise in October as state-owned refiners capitalise on lucrative margins and some western demand, while international flights recover, industry sources and analysts said. The boost in Chinese exports follows Beijing issuing a third batch of fuel export quotas earlier this month.
The world's second-largest oil refiner is importing lower-priced sanctioned oil from Russia, Iran and Venezuela and maximising output to ramp up exports that have helped ease tight gasoline and diesel supplies globally and capped prices. China's gasoline, diesel and jet fuel exports may be 4.02 million metric tons in October, according to the median of estimates from consultancies and trade sources.
That would be up from data from shiptracking firm Kpler showing exports in September were 2.38 million tons and LSEG loading data showing exports were 3.395 million tons. However, that data does not include jet fuel loaded onto outbound Chinese flights that the country's customs agency includes as exports. "Higher October export plans suggest refineries are not worried about using up existing quotas and they are expecting additional export quotas," said Energy Aspects analyst Sun Jianan, referring to a possible fourth allocation for 2023.
Among the products, jet fuel exports may be 1.63 million tons, according to the median of estimates from consultancies Longzhong, JLC and FGE. That would be up from an estimate of 1.6 million tons for September that includes the fuel loaded onto outbound flights. Exports will rise along with international flight capacity which could reach around 55% of 2019 levels during the October holiday season, FGE analysts said in a note. China counts the refuelling requirements from international flights from bonded warehouses as jet fuel exports. September's international flight capacities are now 54% of the levels in the same month of 2019, up from 52% in August, aviation data analytics firm OAG said, adding that the largest monthly capacity increase was on the China-U.S. route.
For gasoline, exports may be 1.14 million tons, according to the median of forecasts from Longzhong, JLC, LSEG, FGE and Energy Aspects. That would be higher than Kpler's data for September loadings of 1 million tons but less than LSEG's data showing 1.26 million tons. Refinery outages in the U.S. and Europe have tightened supplies and encouraged Chinese exports, two Singapore-based traders said. At least 122,000 tons of gasoline will be heading to Mexico from China in October, with volumes climbing since March, Kpler's data showed. Diesel exports may be 1.25 million tons in October, the median of estimates from Longzhong, JLC and the two Singapore-based traders showed. That would be less than the 1.1 million tons of diesel loadings the LSEG data shows and the 732,000 tons that Kpler is reporting.
Chinese refiners stand to reap $10 a barrel profit from diesel exports, one China-based trader said. However, Xu Peng, refined products analyst at JLC said: "While strong Asian margins are still encouraging refiners to export their cargoes, volumes going forward may still be limited by the quota availability." (Reporting by Trixie Yap and Andrew Hayley; Editing by Florence Tan and Christian Schmollinger)