BEIJING/SINGAPORE (Reuters) - China has issued 2.93 million tonnes of additional export quotas for refined oil products for 2018, according to a government document seen by Reuters, potentially stoking a gasoline glut that has pushed profit margins for the fuel to 2-1/2 year lows.
The new grants are to state oil firms including China National Petroleum Corp, Sinopec Group, China National Offshore Oil Corp, Sinochem and China National Aviation Fuel Co, according to a source with direct knowledge of the issue.
The source, who declined to be identified as he was not authorized to speak with media, said the quotas would be valid until year-end.
China’s fuel exports have soared since 2015 as the government has gradually increased export quotas. The latest allowances will add to oversupply of refined products, especially gasoline.
Refinery profit margins for the fuel have plunged by 74 percent since August to $3 per barrel, their lowest since mid-2016.
“Gasoline could very well be a drag on margins until late 2Q19,” U.S. investment bank Jefferies said in a note on Friday.
The new quotas are for 1.6 million tonnes of jet fuel, 740,000 tonnes of gasoline and 590,000 tonnes of diesel, and all fall under the general-trade category where the refiners will pay tax on the fuel with government rebates paid after its exported, according to the document.
China’s state oil firms requested the additional quotas to prevent having to cut their refinery throughput in the fourth quarter.
Reporting by Chen Aizhu in BEIJING; additional reporting by Roslan Khasawneh and Henning Gloystein in SINGAPORE; Editing by Christian Schmollinger and Joseph Radford