Diesel Exports From China Decline to Lowest Level Since Mid-2023

(Bloomberg) -- Diesel exports from China hit the lowest since June 2023 as refiners grappled with a limited shipment quota and near break-even margins.

Cargoes dropped to 350,000 tons last month, according to customs data on Friday. That’s less than half the level in August, and 71% below September last year. Gasoline exports were 730,000 tons, the least since April.

Refiners in Asia’s swing exporter of petroleum products have been hurt by a slowdown in nationwide growth, as well as the gradual decarbonization of the country’s transport fleet. Apparent oil demand fell by 7% in September, according to data on Friday, underscoring the industry’s challenges. 

In this environment, refiners have been reducing runs, paring diesel production, while they have about 9 million tons of export quota left for rest of year out of 41 million, according to energy consultant JLC. Beijing gave out a lower-than-expected shipment quota last month.

The margin on diesel exports from ports in south China was just 46 yuan ($6.50) a ton in September, compared with a 82 yuan in August, according to data from Mysteel OilChem. Across the region, profits from producing diesel from crude — shown via so-called crack spreads — fell to $12 a barrel at end of September, compared with $32 a barrel last year.  

Chinese refineries are expected to reduce diesel exports by more than 30% this month compared with September’s pace, according to OilChem.

©2024 Bloomberg L.P.