China's Oil Giants Struggle to Meet Domestic Diesel Demand, Suspend Exports and Seek Imports

Strategic Insights -

China's oil giants, Sinopec and PetroChina, are working to alleviate diesel shortages in the domestic market by halting exports and seeking imports. Sinopec has suspended diesel exports while PetroChina plans to import 200,000 tons of diesel, with 35,000 tons already arriving. Insiders attribute the shortage to the industry's monopoly and planned-economy basis, making it difficult for oil refiners to increase production due to low profit margins.

Key Takeaways:

  • Sinopec has suspended diesel exports to relieve shortages in the domestic market, while PetroChina plans to import 200,000 tons of diesel.
  • 35,000 tons of diesel has already arrived via import, with an additional 165,000 tons expected to meet the demand.
  • China's diesel output soared in the first nine months, prompting the two oil giants to expand exports, but recent data shows a slight decline in exports.
  • The General Administration of Customs reported that China exported 360,000 tons of diesel in October, only slightly lower than the 368,100 tons in September.
  • Diesel imports rose to 400,000 tons in October, up from 250,000 tons in September, indicating a significant increase in demand.
  • Sinopec attributed the diesel price hike to hoarding, seasonal factors, transport factors, and energy-saving measures.
  • The oil industry's planned-economy basis and monopoly are seen as major factors contributing to the shortage, making it difficult for oil refiners to increase production.
  • Government planning cannot keep pace with market changes, resulting in an unbalanced supply-and-demand situation.

Statistics:

  • 360,000 tons of diesel exported in October (Source: General Administration of Customs)
  • 368,100 tons of diesel exported in September (Source: General Administration of Customs)
  • Diesel imports rose to 400,000 tons in October (Source: General Administration of Customs)
  • 250,000 tons of diesel imported in September (Source: General Administration of Customs)
  • 200,000 tons of diesel planned to be imported by PetroChina (Source: PetroChina Co.)
  • 35,000 tons of diesel already arrived via import (Source: PetroChina Co.)

Sources:

  • (PNA/Xinhua)
  • (Xinhua)