* Beijing issues Q3 quotas but volumes mostly jet fuel
* Possibility of no diesel exports for 3rd quarter -source
* Lack of exports likely to support Asian diesel margins
By Jessica Jaganathan
SINGAPORE, July 5 Asia's biggest refiner Sinopec
Corp will export no diesel for a third
month in July, and may also skip shipments in August, industry
sources with knowledge of the matter said on Friday.
China controls diesel exports through quotas to a few
state-run traders after sizing up domestic needs. Beijing has
just approved third-quarter export quotas for Sinopec, but most
of the volumes are for jet fuel, said one of the sources.
The continued absence of China's dominant diesel exporter
from the market will likely support margins for the fuel near
three-month highs hit late in June, offsetting an expected slump
in demand from Saudi Arabia and Indonesia.
Sinopec's total jet fuel export quotas are about 1 million
tonnes for the quarter, the source said.
"But there will likely be no gasoil exports for the third
quarter," the source added.
Lack of diesel exports from China boosted Asian gasoil
margins late last month when Saudi Arabian and Indonesian demand
rose ahead of the Muslim fasting month of Ramadan.
A second source with knowledge of the matter said it was too
early to say for sure on August diesel exports but Sinopec had
none planned so far. Export plans will be clearer by the end of
July, the second source said.
State refiners can apply for an increase in quotas if needed
or if they use up an existing allotment.
The restrictions on diesel exports have not yet meant a
build up in stocks, a source close to a Chinese refiner said, as
authorities are trying to boost demand.
"Actually, I heard the diesel inventory is not as high as
before," the source said.
The country's second-largest refiner PetroChina
will also most likely not be exporting much diesel
in July, though its export commitments for August are not yet
clear, another industry source said.
China, the world's second-largest oil consumer, turned net
diesel exporter in mid-2012 as the weakest pace of economic
growth in 13 years pared annual demand growth for the fuel to
less than two percent.
For the first four months of this year, overseas diesel
shipments from China spiked to 250,000 tonnes to 400,000 tonnes
a month, following weak domestic demand for the fuel that struck
as new refining capacity came online.
That combination contributed to a collapse in Asian gasoil
margins to the lowest in more than two years in late April.
Official customs data shows that China exported 227,133
tonnes of diesel in May, but this was likely sent to the Hong
Kong bunker market, an industry source said.
May's exports were up about 27 percent from the same period
last year, but down from this year's monthly high of 415,931
tonnes in March, the data showed.
The figures do not fully reflect China's diesel imports or
exports, since they include transit barrels shipped to
tax-bonded storage, which may not be destined for China.
(Editing by Tom Hogue)