China’s crude oil processing rebounded in April and flooded the already-well-supplied Asian market with more fuels, pushing downward refining margins in the region which are already battling weak fuel demand, according to Clyde Russell, a commodities and energy columnist at Thomson Reuters.
Official data released on May 15 suggests that Chinese refiners processed about 13.1 million bpd of crude in April, surging from a 15-month low of 11.78 million bpd in the previous month. This mostly reflects a recovery in domestic fuel demand after the coronavirus lockdown was lifted. However, it also raises the likelihood that China exported more refined products to the Asian market.
The data showed China’s fuel exports in April were up 10.2% month-on-month and surged 29.7% year-on-year to at a record 8 million tonnes, equal to roughly 2.13 million bpd. China exported an average of 1.72 million bpd of refined products in the first month of 2020, rising by 15.1% from the same period last year.
China issued another export quota for domestic refiners allowing them to ship 28 million tons of refined products, mainly gasoline, diesel and jet kerosene to overseas markets. This is on top of the previous quota of 27.99 million tons.
The increasing fuel exports from China contributed to the weakness in Asian refinery profit margins. As of Monday, he benchmarks refinery margins in Singapore showed a loss of $3.29 for production using Dubai crude, compared to the five-day average of minus $1.84/barrel. Gasoline was the primary contributor to the loss. Producing a barrel of 92-RON gasoline in Singapore with Brent crude resulted in a loss of 85 cents/barrel on May 15, compared to this year’s peak of a $9.35/barrel profit on February 11.
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Published on May 19, 2020 11:12 AM (GMT+8)Last Updated on May 19, 2020 11:12 AM (GMT+8)
