China suspends fuel exports, raising diesel price risks in Asia

Chinese refiners have suspended fuel exports in October as the authorities seek to rebuild domestic inventories. The restrictions mainly affect diesel, gasoline and jet fuel, while shipments to Hong Kong and Macau may continue.

PetroChina has already cancelled some gasoline and jet fuel cargoes scheduled for October, while Zhejiang Petrochemical did not plan any shipments during the holiday week. It remains unclear whether exports will resume after October 7, with the decision likely to depend on domestic fuel stocks, crude oil availability and refinery output.

China’s move further tightens supply in the Asian market, where availability is already under pressure from disruptions to Middle Eastern crude oil and fuel supplies and lower Russian refining output. Expectations of reduced Chinese exports pushed the October-November Asian diesel spread to a two-week high.

China’s commercial diesel inventories are estimated to be around 20 mln barrels below the level considered sufficient for exports to resume, while gasoline stocks are about 9 mln barrels below that threshold. In September, China shipped around 1.4 mln tons of diesel, 500 thsd tons of gasoline and at least 2 mln tons of jet fuel.

Singapore, Malaysia, Australia, Vietnam, Bangladesh and the Philippines were among the main buyers of Chinese fuel in September. Lower Chinese exports could support diesel prices across the region and increase transportation and logistics costs.

Tags: export, prices, crude oil, fuel, Asia, diesel, China