China’s diesel exports set to climb after averting supply crisis, domestic stock ‘to build over winter’
- China National Petroleum Corporation and China Petroleum & Chemical Corporation, better known as Sinopec, started boosting production in September
- Refiners now have a surplus of diesel that can be shipped to international markets
China has averted a full-scale diesel crisis after refiners quickly ramped up production, with excess supply poised to flow into a regional market starved of the industrial fuel.
While some fuel retailers were forced to ration diesel volumes and at least one refiner imported the fuel to meet rising consumption, the nation’s output rebounded in October to the highest level in 13 months.
Refiners now have a surplus of diesel that can be shipped to international markets.
Supply tightness has largely subsided with hiked production and declining domestic demand. We expect domestic inventories to build over winter
China had retreated from the export market to conserve its domestic supplies, which left consumers turning to India and South Korea to meet their needs as economies rebounded from the coronavirus pandemic.
“Supply tightness has largely subsided with hiked production and declining domestic demand,” said Mia Geng, an analyst at industry consultant FGE. “We expect domestic inventories to build over winter.”
Diesel consumption had surged since September due to seasonal factors such as more demand from the fishing industry and for crop harvesting, while an energy crunch after natural gas and coal shortages led to greater use of the fuel in power generation.