February gasoline exports will likely remain steady versus January levels due to high refinery runs, though icy weather has disrupted some cargo flows at northeastern ports, they said.
Other than this, the key refineries in the northeast have so far seen few disruptions to inbound crude cargoes or outbound fuel shipments, industry sources said, after massive sea ice floes built up following a cold snap early n January.
At least four plants – Jinzhou, Jinxi, WEPEC and Dalian – all under PetroChina that regularly import crude and export gasoline and diesel, are located in the areas hit by the cold front.
Diesel outflows are expected to be stable in the two months at 300,000-400,000 tonnes each, down from December volumes of around 400,000-500,000 tonnes, traders said.
Chinese oil companies may also be holding more domestic supplies in anticipation of further fuel price hikes in the wake of escalating crude levels, they said.
“I think China’s diesel exports for January and February could fall versus December, which were boosted by record refinery run rates,” said a distillates trader.
“Run rates will continue to remain high, but diesel exports for this month and next could ease because of speculative stockpiling ahead of another possible fuel price hike, and before the Chinese New Year festivities,” he added.
In November, China said it would raise gasoline and diesel prices by around seven percent to reflect the rising cost of crude oil, taking pump prices to their highest ever.
The price hike was the first adjustment in two months and the eighth this year, after four previous rises and three cuts.
Industries in China, as well as transport and logistics firms, are expected to accumulate diesel supplies in the run-up to the Lunar New Year in mid-February, in readiness for a pick-up in production activity after the holiday celebrations.
Some gasoline disrupted
China is expected to keep February gasoline outflows stable at around 350,000-380,000 tonnes, as high refinery crude runs sustain export volumes, traders said.
However, freezing temperatures have disrupted some gasoline shipments at ports including the Bohai area off north China, as ships are taking more time to sail into and out of harbours.
The build-up of sea ice, the worst in nearly three decades, have hit operations of oil drilling platforms, port activities and crude production at Shengli offshore oilfield, the largest producer under Sinopec Corp in Bohai Bay.
“But I think that should resolve within a short span of time, and you will see parcels being moved out soon,” said a trader. “I think 350,000-380,000 tonnes for each month is a fair estimate.”
China has been moving an average of at least 300,000 tonnes of gasoline a month to Asia since last April, hitting the year’s peak of nearly 560,000 tonnes in June, intensifying competition for other sellers grappling with meagre regional demand in 2009 amid the economic crisis.
But demand has started to recover this year.
“I think the January market will be well-supported by demand from Vietnam and Indonesia, and there is room for Chinese exports,” said a second trader.
Indonesia’s gasoline imports are expected to stay above five million barrels for three-straight months since December, as outages affected its supplies.
A delayed start-up in Vietnam’s refinery at Dung Quat also lifted sentiment, coming at a time of strong demand in the country.
China’s top 12 major refineries that account for more than a third of its capacity, plan to process 2.88 million bpd of crude in January, after registering record runs in November, and as one unit resumed operations after maintenance in December.