China refined oil export quota and gasoline export analysis

China issues the second batch of 2021 export quota for refined oil products. The amount of the second batch totals 7.5 million tons, down 75% from 2021’s first batch and down 73% from 2020’s second batch.

The export quota of 2021 second batch reduces sharply, with China stepping up control on exports of refined oil products with the commitment in gasoline system reform. The fact that China imports large amount of crude oil and exports refined oil products heavily leads to pollution and emissions during the production locally, which is not viable anymore. In addition, China pledges to reach peak carbon dioxide emissions and achieve carbon neutrality as national strategy.

In the past years, China has been reliant on exports to relieve oversupply of refined oil products in domestic market. However, the benefits for companies could not be ensured as export profits were not good. In addition, exporting large amount of refined oil products was adverse to green and low-carbon production as well as the country’s achieving the carbon neutrality goal.

From the charts above, it can be seen that China domestic gasoline output is slowing down in recent years, especially in 2020 when the production was affected by the spread of pandemic. China gasoline output reached 141.207 million tons in 2019, and 131.717 million tons in 2020, down 6.72% year-on-year. However, gasoline was still supplied more than what could be consumed in domestic market, and the market have been resorting to exports to alleviate the oversupply. China gasoline exports have been rising in recent years, amounting to more than 16 million tons per year in 2019 and 2020. In the first half of 2021, gasoline exports remained high, reaching 9.56 million tons.

The main destinations for China gasoline exports were Singapore, the Philippines, Malaysia, and Mexico. Singapore accounted for 60% of China gasoline exports in 2019, and took up 51% in 2020.

Gasoline exports rose fast in the first half of 2021, as exports were affected by the pandemic outside China in May-Jun last year. In 2021, the exports were stable.