MOSCOW (MRC) -- Chinese refiners are poised to boost diesel exports in September to more than 1 MMt, drawn by lucrative margins from selling overseas and as they expect to receive more export quotas from Beijing, said Hydrocarbonprocessing.
The rise in Chinese exports could cap recent sharp gains in refining margins for the industrial and transport fuel and offset lower supplies from India and the Middle East, where several major refineries are due to shut for maintenance from September.
China's diesel exports are estimated to be 1.1 to 1.2 MMt next month, according to data compiled by two trading sources and China-based consultancies Longzhong and JLC.
That would be up from the 650,000 to 887,000 tons of diesel exported so far in August from Chinese ports, according to ship tracking data from Refinitiv and Kpler.
The difference between benchmark Singapore 10-ppm gasoil and Dubai crude oil, a profit margin for refiners known as the crack spread, has more than doubled in the past two months to $34 to $36 a barrel due to refinery issues in the U.S. and Europe, Refinitiv data showed.
Exports were initially expected to slow at the end of the third quarter as refiners planned to increase stockpiles before peak seasonal construction demand kicks in, but export margins have been too good to resist for sellers, said two China-based traders who declined to be named due to company policy.
Chinese diesel could sell for at least 200 yuan ($27.47) a ton more when exported compared to being sold domestically, a China-based trading analyst said.
Some Chinese refiners have sold September 10ppm sulfur diesel cargoes via spot tenders since last week at premiums of up to $1 a barrel to Singapore quotes on a free-on-board basis. That is up from mainly flat premiums for August cargoes.
We remind, Chinese refining giant Sinopec Corp plans to maintain steady refinery output during the second half of 2023 as domestic fuel demand recovers, after reporting a 20% decline in interim profit because of lower crude oil prices. Sinopec, the world's largest refiner by capacity, plans 127 million metric tons of crude throughput, about 5.04 million barrels per day, between July and December, versus 126.54 million tons during the first six months.