China’s fuel exports jump after refiners issued bumper quota

China’s overseas shipments of gasoline and diesel surged in December as refiners utilized a bumper export quota issued late last year.

Gasoline exports rose to 1.91 million tons, matching a record set in October 2020, according to government data released Wednesday. Diesel shipments climbed to 2.79 million tons, the highest level since March 2021.

Beijing gave refiners and traders 15 million tons of new quota in September, its biggest allocation for the year, in an attempt to help revive the nation’s economy after virus lockdowns. The rapid dismantling of the country’s Covid Zero policy last month also throttled domestic fuel demand as infections surged, leaving a surplus supply for exports.

Europe may look to China to help plug a diesel supply gap after sanctions on Russian flows take effect early next month. The Asian nation has the capacity to meet additional demand after Beijing issued a fresh quota at the start of the year, but volumes depend on the speed and scope of China’s recovery.

However, export volumes are expected to fall this month as state-run refiners restock ahead of the Lunar New Year holiday, according to industry consultant OilChem. Diesel shipments are expected to drop by 45% from December.

Overall, gasoline exports in 2022 declined 14% to 12.56 million tons, while diesel flows dropped 37% to 10.92 million tons. Fuel shipments are expected to fall further this year as China shifts back to its pre-virus growth mode and carbon neutrality takes priority.