LONDON, Jan 24 (Reuters) – China’s exports of refined petroleum products, especially diesel, surged in the final two months of 2022, relieving some of the global shortage caused by unusually low exports since the middle of 2021.
Exports of refined products totaled 54 million tonnes in 2022, down from 60 million in 2021 and 62 million in 2020, according to preliminary data from the General Administration of Customs (GAC).
China’s exports were below normal for 16 months from July 2021 through October 2022 with a cumulative shortfall relative to the previous trend of 21 million tons or 167 million barrels.
The downturn was concentrated in diesel with a cumulative shortfall of around 17 million tonnes or 128 million barrels (“Monthly bulletin”, GAC, January 18).
Reduced exports contributed to depletion of global diesel inventories and extremely high margins for refiners in the rest of the world in 2021/22
Chartbook: China petroleum exports
In the final two months of the year, however, volumes surged after the government issued increased export quotas at the end of the third quarter.
Diesel exports accelerated to a near-record 2.8 million tonnes in December, from just 1.1 million tonnes in October, narrowing the deficit since mid-2021 to less than 16 million tonnes or 117 million barrels.
Coupled with the slowdown in the business cycle, increased exports from China have stabilized and started to replenish distillate inventories in North America and Europe.
Diesel exports are likely to remain faster-than-normal for several months following the allocation of another large tranche of quotas at the beginning of 2023 (“China raises fuel export quotas to spur refinery output”, Reuters, January 3).
The result should increase diesel availability and depress margins in the first and second quarters of 2023, until China’s rebound from the pandemic begins to crimp exports and deplete inventories again in the second half of the year.
– China’s diesel exports recover but not enough to reverse global shortage (Reuters, November 9)
– Diesel’s gloomy message for the global economy (Reuters, October 14)
John Kemp is a Reuters market analyst. The views expressed are his own
Editing by Jane Merriman
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John Kemp is a senior market analyst specializing in oil and energy systems. Before joining Reuters in 2008, he was a trading analyst at Sempra Commodities, now part of JPMorgan, and an economic analyst at Oxford Analytica. His interests include all aspects of energy technology, history, diplomacy, derivative markets, risk management, policy and transitions.