TIGHTER MARKET?
The question is whether this will lead to a tightening of
supply and higher prices in Asia.
Much will depend on whether other fuel exporters to the
region pick up the slack, and also whether there is an increased
call on cargoes from Asia by buyers in Europe, which has now
sanctioned imports of refined products from Russia.
There are signs of rising exports from India amid strong
refinery processing rates, and also from Middle East producers
such as Saudi Arabia and the United Arab Emirates.
India's diesel exports were 470,000 bpd in February, the
most since December 2021, according to data from commodity
analysts Kpler, while its gasoline shipments were about 314,000
bpd, the most since April last year.
Certainly, the profit from producing both diesel and
gasoline at a typical refinery in Singapore has yet to show any
substantial rise in response to expectations of lower Chinese
exports.
The margin on producing gasoil , the building
block for diesel, ended at $23.51 a barrel on Wednesday, down
from $25.06 the prior day and also below the peak so far this
year of $38.89 on Jan. 25.
The profit on gasoline ended at $13.32 a
barrel on Wednesday, down from $13.52 the prior day and below
the high so far this year of $18.32 from Jan. 26.
The opinions expressed here are those of the author, a columnist
for Reuters.
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GRAPHIC-China diesel exports vs Singapore gasoil crack: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Kim Coghill)
(Repeats story with no changes to text)
By Clyde Russell
LAUNCESTON, Australia, March 9 (Reuters) - The flood of
Chinese diesel and gasoline into Asia's markets for refined
products is set to slow sharply in March, as the world's
second-biggest economy starts to consume more fuel domestically.
Official customs data showed that flows of refined products
remained elevated in the first two months of the year as
refiners took advantage of fresh export quotas and relatively
strong regional profit margins.
China exported 12.96 million tonnes of refined oil products
in the first two months of the year, according to customs
figures released on March 7.
China releases combined commodity trade data for January and
February to avoid distortions created by the variable timing of
the week-long Lunar New Year holiday, which began on Jan. 21
this year.
The preliminary data released this week doesn't provide a
breakdown by product, but using BP's conversion factor of 8
barrels of products per metric tonne gives a figure of around
1.76 million barrels per day (bpd) of fuel exports in the first
two months.
This is actually a slight acceleration from the fourth
quarter of 2022, when customs data showed around 1.59 million
bpd of products were shipped from China.
China is a swing supplier of refined fuels to Asian markets,
and the volumes exported are dependent on quotas granted by
Beijing, in what is a largely opaque system that appears more
related to domestic policy considerations than the dynamics of
regional supply and demand.
China's exports of diesel and gasoline were weak in the
first half of 2022, but picked up in the second half as Beijing
increased export quotas, most likely as a quick and easy way to
boost economic activity and the profitability of its refining
sector.
Exports have continued at high levels in January and
February, with Refinitiv Oil Research estimating shipments of
diesel at 446,000 bpd in the first two months of the year.
China's exports of gasoline were estimated by Refinitiv at
about 152,000 bpd in the first two months of year, declining
from the pace seen in the fourth quarter as domestic demand
increased as the country re-opened after ending its strict
zero-COVID policies.
However, exports of both fuels may drop in March with
Refinitiv forecasting diesel shipments of just 120,000 bpd,
which would be a nine-month low.
Gasoline exports are also likely to slide in March, with
Refinitiv estimating shipments at around 82,000 bpd.
Improving domestic demand, planned refinery maintenance and
lower profit margins in regional product margins are the main
reasons that China's exports of diesel and gasoline are expected
to drop sharply this month.
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