China issues new fuel export quotas for T4

China issued fuel export quotas of 9 million tonnes for the final quarter of the year, Reuters reported, citing two local commodity consultancies.

Most of the quotas comprise refined clean fuels, with the remaining 1 million tonnes bunkering fuel. Almost 6.4 million tonnes of the new quotas were issued to state-owned refiners including Sinopec, CNPC and CNOOC.

This latest batch will bring total fuel export quotas for the year to 54 million tonnes, the report said, which was virtually unchanged from 2023 quotas.

Chinese refiners have faced falling margins lately, down 10 percent in August to 12.6 million barrels a day, as industry players have capped output to preserve profits. Meanwhile, inventories built at a rate of 3.2 million barrels a day, which would be the biggest monthly increase in inventories since 2015, commodities analysts ING wrote in a recent note.

Meanwhile, China’s gasoline exports fell 44% year-on-year in August to 770,000 bpd as export margins fell below zero. In August, Chinese refiners used up about 80% of their fuel export quotas. Apparent demand for oil during that month was estimated at 12.5 million, down 15% on the year.

Pressured by lower margins and lukewarm domestic demand, two independent refineries recently went out of business. Zhenghe Group Co and Shandong Huaxing Petrochemical Group Co were declared bankrupt after creditors failed to agree on plans to restructure the refineries, local court filings showed on Tuesday, according to Bloomberg.

A third refinery operated by Sinochem in Shandong province, home to China’s independent refiners, is expected to begin meeting with creditors later this month. That is Shandong Changyi Petrochemical Co, according to a separate local court filing cited by Bloomberg earlier this week.

By Irina Slav for Oilprice.com

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