MOSCOW (MRC) -- China's diesel exports could fall to an eight-month low in March as refiners focus on meeting local demand and increasing domestic stockpiles ahead of planned overhauls at refineries, a Reuters survey showed.
Lower Chinese exports also point to a recovery in domestic fuel demand and prices after the world's second-largest oil consumer lifted COVID-19 measures. The decline in exports could tighten Asia's supplies and provide support for refiners' diesel margins, especially as the region enters peak demand season from the agriculture and construction sectors between April and July.
Exports of the industrial and transportation fuel are estimated at 400,000 to 770,000 tons compared with estimates of about 2 MMt in February, a survey of consultancies JLC, Longzhong and Refinitiv, and two China-based trade sources showed. Diesel exports were last at similar levels in July last year, China customs data showed.
This could bring the combined March exports for all three products - diesel, gasoline and jet fuel - to between 1.5 MMt and 1.94 MMt, at least 50% lower than February's estimate of 3.9 MMt to 4.15 MMt, the survey showed. The need to secure sufficient domestic supply during the peak maintenance season for Chinese refineries is a major reason for lower diesel exports, Vortexa analyst Emma Li said.
Between 600,000 bpd and 800,000 bpd of crude processing capacity will be shut between April and June, curbing refined products output, Reuters calculations and consultancies' data showed.
Another factor is that Chinese exporters' profits have fallen, sapped by a more than 30% drop in Asian diesel cracks since mid-January. Domestic netbacks are more favorable as local retail prices have fallen less than international prices, a Singapore-based trader said.
Chinese refiners are also less inclined to use up their export quotas quickly as Beijing is expected to curb exports in 2023 versus 2022, Vortexa's Li added.
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