China eased restrictions on the export of refined fuels for the remainder of July, a measure that allows refineries to expand their international sales and return competitive pressure to the Asian petroleum products market.
According to trade sources cited by Reuters, Chinese refineries plan to export nearly 3 million metric tons of gasoline, diesel, and jet fuel during the month. The figure is close to the monthly average recorded last year and exceeds initial forecasts for July.
Zhejiang Petrochemical returns to the foreign market
Furthermore, Zhejiang Petrochemical Co., majority-controlled by Rongsheng Petrochemical, has reportedly received authorization to resume international shipments after a pause of more than three months. Its return is significant because China had limited private exports while prioritizing domestic supply.
Until now, state-owned companies could export gasoline, diesel, and jet fuel under a monthly approval system. With the new easing, the market expects an increase in shipments to regional destinations such as Hong Kong, Macau, and other points in Asia.
China expands refined fuel exports
According to sources, gasoline exports could exceed 400,000 metric tons in July, compared to a preliminary estimate of less than 40,000 tons. In diesel, shipments would reach between 600,000 and 700,000 tons, while jet fuel would be around 1.9 million tons.
Likewise, export margins remain attractive for Chinese refineries, with levels near or above 1,000 yuan per ton. This profitability may incentivize greater refining activity and raise crude oil demand in the world’s leading oil importer.
The Iran war set the market pace
The decision comes after weeks of tension in the Middle East. Disruptions linked to the Iran war had raised supply concerns and led Beijing to restrict shipments to protect its domestic market.
Subsequently, the provisional agreement between the United States and Iran helped normalize part of the crude oil flows from the Middle East. Although recent attacks have once again stirred prices, the Chinese reopening may ease the transport fuel market in Asia.
The big question lies in August
For now, it is unclear whether China will maintain the easing in August. Refineries are still adjusting shipment schedules, and the final calendar should be defined in the coming days.
Meanwhile, analysts observe a possible rebound in gasoline exports toward the end of the year. The pressure of electric vehicles on Chinese domestic demand could leave more product available for the foreign market.
Source: Reuters
Photo: Shutterstock
