- Sept volumes expected to be at least 4 million tons, steady vs August
- Diesel, jet fuel to account for bulk of China's exports
- More than $200/ton profit estimated for diesel export
SINGAPORE, Sept 2 (Reuters) - China is expected to allow refiners to export steady volumes of refined fuel this month versus August, enabling them to profit from higher overseas margins as Beijing continues to ease export controls, five trade sources briefed on the matter said.
Beijing began restricting fuel exports in March to protect domestic supplies after the U.S.-Iran war disrupted crude imports from the Middle East.
While global crude supplies have improved somewhat, fuel markets remain tight. Russia, one of the top fuel exporters before its war with Ukraine, became an importer after Ukrainian drone attacks on its refineries triggered supply shortages, while Middle Eastern fuel exports remain limited.
To capture higher profits, Chinese refiners are expected to export slightly more than 4 million metric tons of gasoline, diesel and jet fuel in September, according to the sources and two Chinese consultancies that track the sector.
China's exports of the three fuels combined averaged around 3 million tons a month last year.
Rising exports of refined products from China are expected to add to Asian supplies and could help cap regional price gains, sources said.
Jet fuel is expected to account for the largest share of September exports at up to 2.4 million tons, followed by diesel at more than 1 million tons, according to data compiled from the sources.
Gasoline exports could reach up to 600,000 tons, the data showed.
Industry estimates put August shipments at similar levels, with gasoline exports at 700,000 to 800,000 tons, diesel at 1.1 million to 1.2 million tons and jet fuel at 2.2 million tons.
The figures include jet fuel supplied for international flights and exports to Hong Kong.
China's National Development and Reform Commission did not immediately respond to a request for comment. Official August trade data is due later in September.
More than 60% of the export allowances were granted to state-owned PetroChina and Sinopec, the five sources said. Zhejiang Petrochemical Corp received allowances of roughly 500,000 tons or more, two of the sources added.
Chinese refiners began marketing September-loading cargoes of all three fuels last week, two of the sources said. Reuters calculations show 500,000 to 600,000 tons of diesel have been offered so far.
Some September volumes were rolled over from August because of tight shipping schedules, the two sources added.
Chinese diesel export margins are estimated at more than 1,500 yuan ($223.19) a ton, some of the sources said. Asia's diesel refining margins are around $70 a barrel, more than three times their level in February before the Iran war began.
Market participants also expect Beijing to issue a third batch of export quota allowances within the next month or so, in line with the timing of releases in recent years.
(1 ton=7.45 barrels for diesel)
(1 ton=7.88 barrels for jet fuel)
(1 ton=8.45 barrels for gasoline)
Reporting by Trixie Yap, Siyi Liu and Chen Aizhu. Additional reporting by Sam Li. Editing by Sonia Cheema and Mark Potter
Source: Reuters