China has announced new fuel export quotas for the remainder of 2024, including 8 million metric tonnes of clean refined fuel and 1 million tonnes of marine fuel, according to reports from Chinese commodities consultancies and trade sources on Friday. This latest release, likely the final batch for 2024, brings the total fuel export allowance to 54 million tonnes for the year. This follows the 45 million tonnes released under the first two quotas, consistent with last year’s total of 53.99 million tonnes. However, the volume of the third batch is lower than last year’s 15 million tonnes, which included 12 million tonnes of light transportation fuels and 3 million tonnes of marine bunker fuel.
The allocation of export quotas is closely monitored by the industry, as it influences regional supply and refining margins. The new quotas are expected to boost China’s crude processing rates, given the significant unutilized export quota remaining from earlier in the year, according to Bi Xin Xin, managing consultant at Wood Mackenzie. Despite the increased quotas, there is potential downside risk due to fluctuations in domestic demand and overall profitability in both the domestic and export markets.
For refined fuels such as gasoline, diesel, and jet fuel, state-owned oil companies Sinopec, CNPC, and CNOOC were granted 6.38 million tonnes, accounting for around 80% of the total. Sinochem received 790,000 tonnes, Rongsheng Petrochemical Corp was allocated 730,000 tonnes, and China North Industries Group Corp (Norinco) was given 100,000 tonnes. While aviation fuel exports have increased by 33% due to rebounding travel demand, exports of gasoline and diesel have fallen by 26% and 31%, respectively, in the first eight months of 2024, compared to the previous year.
Additionally, the 1 million tonnes of marine fuel in this batch is lower than market expectations of 2 to 3 million tonnes, which may reduce domestic supply for bunkering in China. However, traders indicated that this is unlikely to have a significant impact on prices, given lower bunker sales volume in 2024 compared to 2023.
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