MOSCOW (MRC) -- Slumping diesel exports from China are proving a boon to other refiners in Asia, with the profit from producing the fuel rising to the highest in 18 months, reported Reuters.
China has been Asia's second-highest exporter of gasoil, the building block for middle distillate fuels that include diesel, heating oil and jet kerosene, but its shipments have slumped in recent months amid lower refinery processing and a lack of export permits.
China's diesel exports dropped in August to the lowest since May 2015, slumping to 540,000 tonnes, equivalent to about 135,000 barrels per day (bpd), from 1.39 million tonnes in July, according to official customs data released on Sept. 18.
Diesel exports have been on a downward trend since March this year, when they were 2.81 million tonnes, or about 680,000 bpd. The total for the first eight months of the year is now 3.5% below the same period in 2020.
A recovery in China's diesel exports isn't on the cards for September, with commodity consultants Kpler estimating shipments of around 134,600 bpd, roughly in line with August's depressed level.
The absence of Chinese cargoes is boosting profits for other export-focused refiners in Asia, with the crack, or profit margin, for producing a barrel of gasoil from Dubai crude at a Singapore refinery rising to an 18-month high of USD7.96 a barrel on Sept. 17.
The crack did slip back a tad to USD7.92 on Monday, but it is still more than double the 2021 low of USD3.44 a barrel recorded on Aug. 24. That's a rally of 130% in the past four weeks.
The move has helped drive overall profits for a typical Singapore refinery using Dubai crude to more than double the average for the past year. The overall margin for refining a barrel of Dubai was USD5.54 on Monday, up from an average of USD3.19 for August and USD2.04 for the past 365 days.
While the profit for producing diesel is recovering, the same cannot be said for gasoline, with the crack for making the motor fuel from Brent crude at a Singapore refinery dropping to USD6.87 a barrel on Monday, down from a 2021 peak of USD9.92 on Aug. 5.
China's exports of gasoline have also been declining, dropping to 570,000 tonnes, or about 156,000 bpd, in August, from 740,000 tonnes in July and the lowest since February 2019. Gasoline exports have been in a downward trend since January, when they were 1.89 million tonnes, equivalent to about 518,000 bpd.
It's not just China that is exporting less gasoline, with shipments from India expected by Refinitiv Oil Research to drop for a fourth straight month in September, while Singapore is also forecast to export less in September than in August.
Asia's overall fuel demand has been lagging the recovery seen in Europe and North America, given several major countries remain in some form of lockdown.
We remind, as MRC informed earlier, that China's domestic polyvinyl chloride (PVC) market hit a record-high Sept. 22 following the Mid-Autumn Festival holiday, due to concerns over supply after the government ordered some provinces to cut power consumption. Several provinces including Xinjiang, Ningxia, and Shaanxi, where major carbide-based PVC producers are based, were asked to shut, or reduce industrial operations due to higher-than-planned energy consumption in the first half of 2021.
According to MRC's ScanPlast report, Russia's overall production of unmixed PVC totalled 580,500 tonnes in the first seven months of 2021, up by 4% year on year. At the same time, one producer reduced its output.