China Plans to Increase January Exports of Diesel and Jet Fuel, Adding to Global Supply
In January, China’s exports of oil products are expected to rebound as refineries, armed with new quotas, increase shipments of diesel and jet fuel in anticipation of peak Lunar New Year travel, according to estimates from traders and analysts. China, which surpassed the United States as the world’s leading refiner by capacity last year, is set to boost global diesel supplies, thus helping to stabilize prices.
Forecasts suggest that refined fuel exports in January will likely increase by at least 10% compared to December, ranging between 3.5 million and 3.6 million metric tons.
Diesel exports are expected to more than double, and jet fuel sales are anticipated to rise due to demand from international flights. This is an increase from an estimated 3.1 million tons in December.
The export surge follows China’s announcement of the first 2024 batch of 19 million metric tons of export quotas, consistent with the previous year’s figures. Diesel exports in January are expected to reach around 975,000 tons, up from 450,000 tons in the previous month.
The export margins for Chinese refiners have remained lucrative, and the increase in exports is also attributed to expanded commercial diesel inventories during a period of low demand in the transport and industrial sectors during winter.
With weak domestic demand anticipated during the Lunar New Year holidays in February, diesel exports are expected to remain strong. Rising exports from China and the Middle East contribute to the global supply, easing concerns about supply shortages and mitigating the impact of record-low inventories and disruptions to Russian exports that increased diesel prices in the past two years.
Jet fuel exports are projected to reach approximately 1.63 million tons, the highest in over a year, as more people travel abroad during the Lunar New Year break.
This compares to an estimated 1.5 million tons in December the previous year. China counts the refueling of planes departing the country on international routes using jet fuel from bonded warehouses as exports.
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In January, China’s international flight numbers are expected to be around 70% of pre-pandemic levels, a slight increase from December. Refiners are also likely to increase jet fuel output by at least 2% in January after the fuel’s premium surged to the highest level in five years against gasoil.
Gasoline exports, however, are expected to remain flat at 800,000 to 1 million tons in January due to negative refining margins.
