China diesel ex­ports slide as price floor boosts do­mes­tic profit

The Pak Banker - - MARKETS/SPORTS -

China's diesel ex­ports fell from a three-month high while im­ports surged as the govern­ment's de­ci­sion to halt fuel price cuts amid crude's crash made do­mes­tic sales more at­trac­tive.

The world's largest en­ergy con­sumer shipped over­seas 730,000 met­ric tons of diesel in Jan­uary, the low­est in five months, data from the Gen­eral Ad­min­is­tra­tion of Cus­toms showed Sun­day. While that's more than ten­fold the same pe­riod a year ago, ex­ports slid 26 per­cent from about 980,000 tons dur­ing the pre­vi­ous month. Im­ports more than tripled from De­cem­ber to 150,000 tons, the high­est in 10 months.

China has been flood­ing re­gional mar­kets with diesel as stock­piles of the fuel swell amid slow­ing in­dus­trial ac­tivi- ty and shift­ing de­mand growth to­ward gaso­line. The govern­ment's de­ci­sion not to cut retail prices when oil falls below $40 a bar­rel has made do­mes­tic sales more prof­itable com­pared with ex­ports, ac­cord­ing to ICIS China, a Shang­haibased com­mod­ity con­sul­tant. Brent crude, the global bench­mark, closed down 3.7 per­cent at $33.01 a bar­rel on Fri­day.

"Re­fin­ers def­i­nitely pre­fer to sell in lo­cal mar­kets where mar­gins are bet­ter, and a few traders have ac­tu­ally started to im­port," Lin Ji­axin, an an­a­lyst with ICIS China, said be­fore the data were re­leased. "Diesel ex­ports will re­main sub­dued un­til March, when some teapot re­finer­ies may ex­port some car­goes."

China more than dou­bled its first batch of fuel-ex­port quo­tas for this year to 20.93 mil­lion tons, ICIS China said on Jan. 6. Five com­pa­nies, in­clud­ing four in­de­pen­dent re­fin­ers, known as teapots, ob­tained a com­bined 430,000 tons of fu­el­ex­port li­censes for the first time, it said.

The na­tion's net oil prod­uct ex­ports - - a mea­sure that strips out im­ports -- fell 76 per­cent in Jan­uary from the pre­vi­ous month to 350,000 met­ric tons, the low­est since June, ac­cord­ing to cal­cu­la­tions based on pre­lim­i­nary cus­toms data re­leased ear­lier this month. The de­cline in net ex­ports was also partly due to cold weather that boosted do­mes­tic de­mand, an­a­lysts at Cit­i­group Inc. in­clud­ing Ivan Sz­pakowski said in a re­port Feb. 15. Also in Jan­uary, gaso­line ex­ports rose 92 per­cent from last year to 590,000 tons. Al­though kerosene ship­ments were 1.4 per­cent higher from the same pe­riod a year ago, they fell from De­cem­ber to 940,000 tons, the low­est since July.

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