MOSCOW (MRC) -- China’s diesel exports fell for a fourth straight month in July,hitting their lowest level in five years, as tepid demand overseas due to the COVID-19 pandemic forced Chinese refiners to focus on domestic consumers, reported Reuters.
China shipped out only 550,000 tons of diesel, about half of 1.04 million tons in June and a third of 1.58 million tons in July 2019, data from the General Administration of Customs showed on Sunday night.
Gasoline exports were down 28% from a year earlier at 1.12 million tons last month, while jet kerosene exports were down 77% to 320,000 tons.
Analysts expect diesel demand in China, the world’s second-largest oil consumer, to hit a record this year powered by trucking activity.
Profit margins for diesel production had been higher than for gasoline this year until recent weeks, as industrial activity had been recovering faster than domestic travel with the easing of China’s coronavirus outbreak.
Still, the historically high crude throughput is weighing on fuel inventory and refining profits.
Diesel margins were around 86 yuan (USD12.43) a tonne and gasoline 92 yuan a tonne as of mid-August, analysts reckon, down from around 900 yuan a tonne in May.
“State-backed refineries are seeing high stockpiles, while teapots are slashing sales prices and cutting fuel prices to reduce inventory,” said Ding Xu, an analyst at Longzhong consultancy.
Analysts at JLC consultancy expect China’s diesel and gasoline exports to reach 1.56 million tons and 1.37 million tons, respectively, in August.
Customs data also shows that China’s July liquefied natural gas (LNG) imports were 5.03 million tons, up 3% from the same month last year.
As MRC informed earlier, China is set to expand its commercial crude storage capacity by at least 15.11 million cubic meters, or 95.04 million barrels, by the end of 2020. The new capacity, which will create more space to stockpile imports, comes as recent customs data showed China's crude imports hit an all-time high of 11.37 million b/d in May.
Chinese refiner Sinopec started operations at its new Baisha Bay Phase II storage facility in Shanghai from June 1, according to Shanghai Petrochemical's WeChat platform. In addition to the 950,000 cu m of storage that is already under operation at the site, the startup of the Phase II storage facility brings the total capacity of the Baisha Bay facility to 1.4 million cu m, Shanghai Petrochemical said. Sinopec also completed construction of a 800,000 cu m storage facility in central China's Luoyang city in May. This is expected to be online from second-half of 2020, Platts has reported. Another 800,000 cu m of storage capacity will be added to the Luoyang site by June 2021. The Luoyang storage facility will support Sinopec Luoyang Petrochemical's requirements as it expands refining capacity from the current 160,000 b/d to 200,000 b/d in 2021.
We remind that Sinopec Zhongyuan Petrochemical, part of Sinopec Group, is in plans to bring on-stream its cracker following a maintenance turnaround. The company is likely to resume operations at the cracker by mid-September, 2020. The cracker was shut for maintenance on August 1, 2020. Located at Henan in China, the cracker has a ethylene capacity of 220,000 mt/year and propylene capacity of 95,000 mt/year.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
MRC