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China’s refined oil exports tumbled more than 50% in the first half as domestic refineries slowed production despite global gasoline and diesel prices rising amid the country’s carbon-reduction efforts.
Refined oil exports dived 54.7% in the first half from the same period last year and trade deficit in the petrochemical industry increased by 30%, said Fu Xiangsheng, deputy director of the China Petroleum and Chemical Industry Federation, at an industry event this week.
International crude oil prices has been running at high levels, but operating rate at Chinese refineries is lower, which led to a large amount of domestic capacity left idle and missed the opportunity to narrow the trade deficit in the industry, said Fu.
In the first half, the capacity utilization rate of refining equipment in China is currently around 71%, significantly lower than the global average of 90%, he said.
The slumping refined oil exports was mainly due to that the government has been controlling exports of primary products such as refined oil amid the efforts to achieve the carbon-peaking and carbon-neutrality goals, with export quota gradually decreasing.
According to China’s customs data, refined oil exports reached 45.74 million tonnes in 2020, sliding 17.36% from the previous year, and in 2021, refined oil exports fell by another 12% to 40.31 million tonnes.
Despite the falling exports, China’s refinery capacity remains the highest in the world. In 2021, China become the world’s largest refining country with annual capacity at 910 million tonnes, accounting from 18% of the global total, surpassing 907 million tonnes of capacity in the US.
Fu noted that China’s export policy has constrained the release of domestic capacity, while operating rate in overseas refineries is currently rebounding to high levels amid economic recovery.
According to Cinda Securities, as of July this year, operating rate in refineries in the US had recovered to above 90%, rising by 11 percentage points from the same period last year; to above 80% in Europe, rising by 9 percentage points from a year earlier; and in South Korea, the operating rate has hit a new record high, reaching 110% at some point.
The global demand for refined oil products has been robust and prices in the three major refined oil markets – the US, West Europe and Singapore – hit the highest on record. In the week of August 2 – 8, average gasoline price stood at $4.038 per gallon, surging more than 80% from a year earlier, and diesel price was $4.993 per gallon, surging more than 160% from the same period last year.