China has lifted refined fuel export restrictions for the rest of July and allowed a private refiner to resume shipments after a four-month halt, according to trade sources reported by Business Standard and Yonhap News. Zhejiang Petroleum & Chemical Co., majority owned by Rongsheng Petrochemical Co., has been permitted to export fuel in July after halting exports for more than three months. The lifting of export curbs represents a significant shift from the previous policy where only state-owned companies were permitted to export gasoline, diesel and jet fuel in the past few months. As per Yonhap News, this follows a four-month suspension of private sector refined oil exports, with Chinese oil refiners granted more permits this month in a major relaxation of restrictions imposed during the Iran war.
Refiners are planning to export roughly 3 million metric tons of the three fuels this month, including bonded volumes to Hong Kong and Macau, said sources to Business Standard. This volume aligns with export levels from one year ago and represents a significant increase from the 1.3 million tons of oil product exports that authorities approved for July, as reported by Yonhap News. For July specifically, gasoline exports could rise to more than 400,000 metric tonnes, up from slightly below 40,000 metric tonnes in a preliminary plan, according to trade sources. Meanwhile, diesel exports could reach 600,000–700,000 metric tonnes, up from around 200,000 metric tonnes previously, while jet fuel exports may increase to roughly 1.9 million metric tonnes from 1.5 million metric tonnes. The scheduling of these cargoes was still underway and should be settled by the end of this week.
The lifting of export restrictions comes as the world's biggest refiner returns towards normal operations after disruptions from the Iran war. However, pressure is mounting on regional refining margins as Chinese refiners search for available tankers this week, according to Yonhap News. The spread between Asian gasoline prices and Dubai crude has fallen near its lowest level since late March, creating additional challenges for refiners. It remains unclear if the lifting of export curbs will continue in August, according to two sources cited by Business Standard. China's Ministry of Commerce and the National Development Reform Commission did not immediately respond to requests for comment, while Rongsheng did not respond to requests for comment. However, export margins for Chinese refiners remained attractive, hovering at around 1,000 yuan per tonne (US$147.10) or more this week, according to trade sources.
The resumption of refined fuel exports from one of Asia's largest exporters follows the interim peace deal between the US and Iran and is expected to ease transportation fuel prices in the region, where consumers have been grappling with inflation since Beijing curbed shipments in March to secure domestic supplies. Refiners will likely seek to utilise their remaining export quotas once the restrictions are eased, according to FGE NexantECA analysts. They added that gasoline exports are expected to see greater upside than diesel later this year as domestic demand comes under increasing pressure from the rapid adoption of electric vehicles. The interim US-Iran deal had already prompted a surge in Middle Eastern oil exports, putting downward pressure on global prices and easing supply concerns, though this week's attacks have once again unsettled markets, pushing prices higher.
