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The first batch of fuel export quotas that China has issued for 2024 is basically unchanged from the first batch of allowances for 2023, Chinese consultancies and trading sources told Reuters on Friday.
Chinese refiners are allowed to export diesel, gasoline, and jet fuel under strict quota regulations, with allowances for each refiner that are usually issued three to four times a year.
In the first batch for 2024, Chinese authorities allocated a total of 19 million tons, mostly to top state-owned refining giants Sinopec and CNPC, according to Reuters’ sources. The volume allowed for exports in the first batch is the same as the first batch for 2023.
Zhejiang Petrochemical continues to be the only private refiner to receive fuel export allowances—of 1.73 million tons in the first batch for 2024.
Toward the end of this year, Chinese fuel exports weakened as refiners had used up their available export quotas.
Analysts have estimated that China’s diesel export peak for this year was in June.
Between January and August, Chinese refiners tripled their diesel exports as export quotas and rising refining margins in Asia proved incentives enough amid tepid domestic diesel demand. In the first eight months of the year, China’s diesel exports soared by 197.2% compared to the same eight months of 2022, according to data from the General Administration of Customs cited by Reuters.
At the end of August, China issued a larger-than-expected fuel export quota in the third batch of allocations for 2023 as authorities sought to incentivize refiners to sustain economic growth and sell more product abroad at a time when China’s 2023 fuel demand may have peaked.
But as early as in September, Chinese authorities signaled to the biggest oil refiners in the world’s top crude oil importer not to rely on more fuel export quotas for the rest of 2023.
As a fourth batch of export quotas for this year wasn’t issued, Chinese refiners were expected to limit fuel exports due to a lack of quotas for the remainder of 2023, despite the stronger margins on the Asian market compared to the domestic market.
