Oil product exports rise 139% on year to 32-month high in December

China’s oil product exports rose 138.7% year on year to hit a 32-month high of 7.7 million mt (1.02 million b/d) in December 2022, data from the General Administration of Customs showed Jan. 13, as domestic demand weakened amid the strongest wave of COVID-19 infections and sufficient export quotas.

China removed all the domestic movement controls in December, leading to an estimated 80% of the population in big cities being infected with COVID-19, according to S&P Global and market analysts. The rising cases of new COVID-19 infections have kept people at home and dampened demand for oil products, leaving more barrels available to export. However, export volumes in December have remained below the high of 8 million mt in April 2022.

Market analysts said clean oil product exports during the month were likely above their estimates of around 6 million mt. The high volume is unlikely to be sustained in Q1 due to an expected recovery in gasoline and jet fuel demand amid the Lunar New Year holiday, with COVID-19 cases having seen declines since December 2022. A month-on-month decline in exports is expected despite the first batch of export quotas rising 46% on the year to 18.99 million mt.

GAC’s oil product import and export data is believed to have included a basket of oil products, with gasoline, gasoil, jet fuel and fuel oil accounting for the majority. The breakdown of products will be released Jan. 20.

S&P Global Commodity Insights had earlier projected China’s gasoline and jet fuel demand to rise by 4% and 15% on the month, respectively, in January. This would be about 91% and 53% of the volumes during the Lunar New Year period in February 2019. Gasoline demand is expected to recover strongly as people prefer to drive cars instead of taking public transportation to avoid infections, especially during the holiday period.

“Outflows should drop from their 2022 year-end peak of close to 5 million mt to about 3.6 million mt (954,000 b/d) on average in Q1 when assuming quota holders use 80% of their first-batch quotas (along with unused 2022 volumes) by end-May, Energy Aspect said in a report dated Jan. 3.

In 2022, total exports were down 11% on the year at 53.69 million mt due to the 40.7% year-on-year decline over January-June.

Oil product imports also fell 2.5% year on year to 26.45 million mt over January-December, resulting in a drop in net oil product exports of 17.9% over the same period, the data showed.

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