Chinese gasoline exports slumped by 44% in August from a year earlier as export margins turned negative and refiners started using up their government-mandated export quotas.
China exported 770,000 tons of gasoline last month, down by 44% compared to August 2023, according to Chinese customs data quoted by Bloomberg.
Refiners have been struggling with weak refining margins and low and sub-zero export margins on fuels amid weaker-than-expected demand in the region.
Moreover, refiners and fuel sellers are estimated to have already used around 80% of their export quotas for this year, per Bloomberg’s estimates.
The margin on gasoline exports for Chinese refiners slumped to -$16 (-111 Chinese yuan) per ton last month, according to Mysteel OilChem data cited by Bloomberg. To compare, the exports of gasoline fetched a profit margin of more than $34 (240 yuan) per ton in July.
Refining margins have also slumped in recent weeks across Asia and China, and Chinese refining output has declined.
Refining margins across Asia fell in the first week of September to their lowest level for this time of year since 2020, which could lead to more curbs on run rates at Asian refiners, including in China.
In August, Chinese refiners were estimated to have processed around 12.6 million barrels per day (bpd) of crude oil, down by nearly 10% compared to July and 17.5% lower compared to August last year, ING commodities strategists Warren Patterson and Ewa Manthey wrote in a note earlier this week.
The numbers suggest that apparent oil demand fell below 12.5 million bpd, down by more than 15% year-over-year and to its weakest level since August 2022.
As a result of slumping margins and rising fuel supply amid weakening demand, analysts expect further cuts in refining utilization going forward, which doesn’t bode well for oil demand in the world’s most important growth market, Asia.
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By Charles Kennedy for Oilprice.com
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