China expects a slight increase in refined fuel exports during June, although it will maintain the restrictions imposed by Beijing to protect domestic supply amid geopolitical tensions in the Middle East.
According to trade sources consulted by Reuters, exports to destinations other than Hong Kong will reach approximately 550,000 metric tons in June, compared to the roughly 500,000 tons estimated for May. This reflects the Chinese government’s caution regarding potential disruptions to the global crude oil supply stemming from the conflict with Iran and threats to the Strait of Hormuz.
Beijing tightens controls on exports
Chinese state-owned oil companies must now request monthly government authorization for each shipment destined for export. The mechanism aims to strengthen control over the flow of refined fuels in a context marked by volatility in the international oil market.
Similarly, Chinese authorities are maintaining a more restrictive system compared to previous years. Traditionally, Beijing issued a second round of export quotas between April and May. However, this year it only approved a package of 19 million metric tons in December.
The National Development and Reform Commission and the Ministry of Commerce did not issue official comments on the matter.
Diesel and jet fuel will lead shipments
June exports will be dominated by diesel and jet fuel, accounting for more than 500,000 metric tons. The remaining volume will consist mainly of gasoline.
On the other hand, supplies destined for Hong Kong could reach close to 800,000 metric tons, a figure lower than the approximately 910,000 tons projected in May.
During April, China exported small quantities of diesel and jet fuel to Southeast Asian markets, as well as Australia. However, the destinations for the shipments scheduled for June are still not fully defined.
Export margins remain attractive
Despite regulatory restrictions, Chinese refiners continue to obtain lucrative margins in the foreign trade of fuels.
Industry sources estimate profits of around 3,000 yuan per ton for diesel and around 4,000 yuan per ton for gasoline. These margins maintain export interest even under a stricter licensing regime.
The scenario also reflects the existing pressure on the Asian energy market, where a lower availability of Chinese fuels could limit regional supply should tensions in the Middle East worsen.
Source and photo: Reuters