SINGAPORE, Sept 30 (Reuters) – China has set the size of its final batch of petroleum product export quotas for 2022 at around 15 million tonnes, trade sources familiar with the matter said on Friday, a change in fuel export policy as Beijing seeks ways to boost trade.
The allowances, widely expected by the market over the past two weeks, include 13.25 million tonnes of refined products – normally gasoline, diesel and aviation fuel – and 1.75 million tonnes of fuel low-sulphur marine, two of the sources said.
The new issuance of 13.25 million tonnes, the largest allocation of the year, brings total diesel, gasoline and jet fuel allocations combined for 2022 to 37.25 million tonnes, on par with 2021.
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Industry and government sources said the hasty move to boost refined fuel exports, a shift in policy after tough restrictions earlier in the year, was part of Beijing’s push to boost the decline in goods exports. read more read more
Asia’s petroleum products market fell after the news, with refining profits for 10ppm gas oil hitting a two-week low of
$32.00 a barrel above benchmark Dubai crude, down from $36.93 on Thursday.
Similarly, refining margins for jet fuel also hit a two-week low of $24.85 a barrel in Dubai from $29.58 in the previous session, while those for gasoline slipped to 81 cents. a barrel against Brent crude, against 2.13 dollars the day before.
Sources said major state refiner Sinopec and CNPC together accounted for more than 80% of new permits, with the rest shared by state-owned companies such as Sinochem Group and China National Offshore Oil Company, as well as private company Zhejiang. Petrochemical Corp.
The Department of Commerce, responsible for issuing the quotas, did not immediately respond to a request for comment.
Trade sources and analysts said the sheer size of the new quotas, representing 55% of the volume of the previous four issues combined, could mean some of them could spill out in 2023.
“Due to the large size and given the operational situation of the refiners…companies may be allowed to use some of the quotas in the first quarter of next year,” said the commodities consultancy based in China JLC.
China’s exports of refined products are expected to see strong increases in the last quarter of this year, he added.
The new allowances, under the fifth batch of emissions, included 1.75 million tonnes of ultra low sulfur marine fuel (VLSFO). This brings the total marine fuel quotas published this year to 16.75 million tonnes, almost 40% more than in 2021.
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Reporting by Florence Tan, Muyu Xu and Mohi Narayan; Additional reporting by Matthew Chye; written by Chen Aizhu; Editing by Jason Neely and David Goodman
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