The Chinese government has issued a gasoil export quota of 1.9 million mt to state-owned traders Chinaoil and Unipec, sources said Friday.
Unipec, the trading arm of state-owned China Petroleum and Chemical Corp., or Sinopec, is understood to have been awarded a quota of 1.28 million mt, while China National Petroleum Corp.'s trading entity Chinaoil has been awarded a quota of 620,000 mt, the first quotas issued this year, market sources said.
China issues export quotas in batches. The latest quotas are valid for the entire year but companies can apply for new ones if they exhaust their allocations before the year is over.
Unipec, which has been responsible for the bulk of China's gasoil exports, is expected to ship out 300,000 mt/month of gasoil in the first quarter, largely steady from December, a source with knowledge of the matter said.
Chinaoil will however keep its exports in the first few months of the year at "very low levels," around 10,000 to 20,000 mt a month, another source said.
However, Chinaoil expects overall exports this year to exceed 2013 volumes as CNPC is likely to boost its refinery output this year, the source said. The trader's gasoil exports last year were around 100,000 mt and these occurred mostly in the first half.
China's total gasoil exports last year surged 50% year on year to 2.78 million mt, with Q1 outflows totaling 1.05 million mt. Exports of the fuel last month hit an eight-month high of 310,000 mt, bringing Q4 exports to 770,000 mt.
The Asian gasoil market has been in the doldrums since December, as the Asian arbitrage to Europe stayed firmly shut amid a mild winter in Europe, and surplus barrels in Asia.
Demand from Southeast Asia has been seasonally weak in December and January, while supply of 10 ppm sulfur gasoil has been increasing as Japan hikes its exports of ultra-low sulfur diesel due to sluggish domestic consumption, sources said.
